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The euro falls again, closer than ever to the threshold of 100 lek

2024-08-02 07:46:00, Ekonomi CNA

The euro exchange rate continued to fall on Thursday and came closer than ever before to the symbolic limit of 100 lek. According to the official exchange rate of the Bank of Albania, the euro was exchanged today at 100.14 ALL, the lowest level ever recorded.

The exchange rate continues to be under the effect of the seasonal factor, which is characterized by a large inflow of foreign currency. Historical data show that the peak of the effect of the summer season on the exchange rate is reached between the end of July and the beginning of August.

This year, the seasonal effect has been less visible, due to the intervention of the Bank of Albania, which has been making direct purchases of foreign currency since the end of May, in order to prevent the euro from falling below the 100 lek mark. .

However, this week the euro has slightly lost ground, despite the continuous supervision that the Bank of Albania is exercising over the exchange rate.

An exchange rate of the euro just above the level of 100 lek has become a kind of new normality since a year ago. Now, the annual change in the exchange rate has moderated significantly. Today the euro-lek exchange rate was down by only 1.7% compared to the same day last year.

However, maintaining the exchange rate at these levels is only due to the intervention of the Bank of Albania. If the market forces were left to act freely, the euro would certainly be exchanged significantly below the level of 100 lek for months. The extent of the influence of the Bank of Albania on the exchange rate, however, is difficult to say precisely, because the values ??of the purchase of the currency have not yet been made public.

The Bank of Albania intervened to prevent the further decline of the euro exchange rate, arguing this decision as a function of the legal objective of inflation. In the first part of this year, inflation fell below the central bank's target and in June it was reported by INSTAT at 2.1%.

The strengthening of the lek has had an important role in mitigating imported inflation and protected the Albanian economy from the strong inflationary wave of 2022-2023.

Also, the fall of the euro helped preserve the solvency of borrowers in foreign currency and with income in lek, helping to amortize the effects of the increase in euro interest rates.

But, on the other hand, the fall of the euro exchange rate has brought serious consequences for the economic sectors that sell their products and services in the European currency. This decline has influenced the decline of Albanian exports, but also the increase of prices in certain sectors, such as tourism or construction./Monitor