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Euro strengthens against lek, reaches highest level in two months

2025-03-27 16:15:00, Ekonomi CNA

The euro-lek exchange rate marked a strong increase today. According to the official exchange rate of the Bank of Albania, the euro was exchanged for 99.68 lekë, up 0.91 compared to Wednesday. Today's level of the euro exchange rate is the highest since the end of January.

Strong daily increases in the euro exchange rate are typical of moments when the market shows a large and concentrated demand to buy foreign currency. This is usually due to demand from commercial companies or, in rarer cases, for the needs of banks themselves.

A year ago, on March 27, the euro showed a similar and even higher increase, by 1.7 points in one day. In that case, the increase came due to large purchases by one of the sector's banks, to distribute the annual dividend to its shareholder.

Sources from the foreign exchange market say that practically the same thing is happening this year. According to them, there is no broad-based demand for currency in the market that would signal a sustainable and structural increase in the euro exchange rate. All the demand for currency has come from a single bank in the sector, which has made purchases in a large amount.

Experts explain that such situations arise due to the small size and shallowness of the foreign exchange market in the country. Also, in periods near the end of the calendar month, most banks are not very inclined to sell foreign exchange in large amounts, to avoid open positions in foreign exchange beyond the allowed regulatory limits. This factor also makes the impact of large demands in the last days of the month stronger.

Experts believe that this exchange rate increase is likely to be amortized by the market within a few days and the euro-lek exchange rate will gradually fall close to previous levels, as has happened in the past.

In the January-February period, the euro-lek exchange rate marked a slight upward correction from the levels of the end of last year. This can be explained by somewhat lower foreign exchange inflows in this season of the year, but on the other hand also by the significant increase in the lek supply, due to large government expenditures at the end of December./ Monitor Magazine