The euro approaches the threshold of 101 lek/ Touches the lowest level since July 25

2023-12-01 14:56:00, Ekonomi CNA

The euro approaches the threshold of 101 lek/ Touches the lowest level since

Illustrative photo

The euro ended the week with a further drop in the exchange rate with the Lek. According to the official exchange rate of the Bank of Albania, the Euro was exchanged on Friday at 101.17 ALL, losing 0.75 points compared to the previous day. The exchange rate between the Euro and the Lek has reached its lowest level since July 25 of this year. Now, the exchange rate is very close to the historic minimum level of 100.49 ALL, which was registered on July 20 of this year.

The lek continued to strengthen against other major currencies. The US dollar fell further to the value of 92.89 lek, the lowest level since August 2. The British pound was exchanged at 117.42 ALL, the lowest value since July 25.

The exchange rate has already unexpectedly returned to summer values, when foreign exchange flows mainly related to tourism bring about a usual seasonal effect, which this year was anyway much stronger than ever before. However, the return to approximate values ??even in this period of the year testifies to an appreciation of the local currency already based on more stable factors than seasonal ones.

According to foreign exchange agents, the market continues to be characterized by a high supply of foreign exchange, interspersed with a low supply of local currency.

The large foreign exchange flows this year are related to the record numbers of incoming tourism, to the high levels of foreign investments, but also to a favorable year for the energy sector, characterized by growing exports, especially in the autumn months. These exports are estimated to have played an increasing role in the supply of foreign exchange over the past few months.

On the other hand, liquidity in the local currency is quite tight. The annual growth of deposits in lek has almost stopped, while the growth of the monetary supply of lek as a whole (including deposits and money outside banks) is the lowest since the beginning of 2019. An important role in the reduction of the supply of lek has been played the government's tight fiscal policy and budget surplus near historical highs.

This year is ending with the Lek in a stronger position than ever before in the nearly two-decade history of exchange with the Euro. The month of December is generally associated with an increase in the foreign exchange supply, especially in its second part, related to the return of emigrants and a seasonal revival of tourism. Historically, this has led to some depreciation of the Euro exchange rate in the final weeks of the year.

But, on the other hand, the increasingly pronounced tendency of the government to concentrate the expenditure of the budget deficit in the month of December, may give the opposite effect and temporarily recover the course of the European currency. Such a phenomenon was observed in the last days of 2022./ Monitor magazine