"Black Friday" for the Euro/ Lek exchange rate touches the lowest level since the beginning of August

2023-11-24 21:51:00, Ekonomi CNA

"Black Friday" for the Euro/ Lek exchange rate touches the lowest

The lek ended the week strengthening more on the exchange rate with all major foreign currencies.

According to the official exchange rate of the Bank of Albania, the Euro was exchanged on Friday at 102.43 ALL, losing about 1.5 ALL in the space of one week in the exchange rate with the local currency. This is the lowest level of the Euro-Lek exchange rate since August 2.

The fall of the Euro has dragged down all other major currencies that are quoted in the Albanian market. The American dollar went down to the level of 93.9 Lek and in the space of one week it has lost approximately 1.7 Lek in the exchange rate. Even the exchange rate of the US Dollar with the Lek has reached its lowest level since August 2.

The British pound was exchanged at 117.97 lek, the lowest level since July 25.

A month ago, the Lek started a new and somewhat unexpected exchange rate appreciation cycle.

According to market sources, the decline has accelerated in the last two weeks due to a strong increase in the supply of Euros in the foreign exchange market. Some of the companies that manage private hydro plants have sold large amounts of Euros during this period. Favorable water conditions have increased the production of electricity during the fall, making the energy balance in this period positive.

The Albanian Power Corporation exported energy during the month of November, but, based on information from the market, it seems that even the smallest energy producers have exported in significant quantities. This has brought even greater foreign currency inflows, moving the exchange rate between the Euro and the Lek downward.

The offer of the Euro and the demand for the Lek in the last months is estimated to have been influenced by a tendency to convert loans held in foreign currency into the local currency. Due to the low exchange rate of the Euro and the lower interest rates for loans in Lek, many borrowers have taken the opportunity to convert the currency of their loan.

On the other hand, the strong drop in the exchange rate is also affected by a fairly tight offer of the Lek in the foreign exchange market. Bank deposits in lek appear at stagnation, while monetary aggregate M2 is showing the lowest growth rates in the last five years.

The Albanian government's record budget surplus is believed to have played a very important role in reducing the supply of Lek. At the end of the 10th month, the value of the surplus had the value of 48 billion ALL, close to the highest historical levels that were recorded at the end of September.

Expectations were that in the last months of the year the government would increase the pace of spending, injecting more Lek into the economy. It was thought that this could be a factor that could bring about a temporary devaluation of the Lek, but so far nothing of the kind has happened.

On the contrary, the Euro course is heading back to the lowest historical levels, which were recorded in July of this year./ Monitor magazine.

"Black Friday" for the Euro/ Lek exchange rate touches the lowest