Euro-Lek exchange rate reaches new historical minimum before the end-of-year holidays

2025-12-24 16:53:47, Ekonomi CNA

Euro-Lek exchange rate reaches new historical minimum before the end-of-year

The Euro-Lek exchange rate is showing further downward trends this week. According to the official exchange rate of the Bank of Albania, the Euro was exchanged today for 96.46 Lekë, the lowest level ever recorded.

According to foreign exchange agents, in recent days there has been an increased supply of foreign currency on the market, which represents a more or less common seasonal trend. In particular, the return of emigrants for the end-of-year holidays brings higher flows of the European currency.

The annual decline in the exchange rate remains at lower levels compared to previous years. Compared to the same date last year, the Euro-Lek exchange rate decreased by 2.1%.

However, the more stabilized performance of the exchange rate during this year is due more to the interventions of the Bank of Albania than to market forces.

From the information so far, the Central Bank has carried out large purchases of foreign currency during 2025. By the end of the 9-month period, these purchases were worth about 800 million euros, while for 2024 it had purchased another 933 million euros. In the absence of interventions by the Bank of Albania, the exchange rate of the European currency would certainly have reached even lower levels in relation to the Lek.

Meanwhile, the Bank of Albania will further increase its planned purchases of foreign exchange in the domestic market for 2026. According to information from the Central Bank, it aims to purchase 330-450 million euros through auctions, with the aim of increasing foreign exchange reserves. The purchase target has increased significantly compared to the projections in the range of 270-350 million euros foreseen for 2025.

The above amounts do not include possible purchases for the purposes of intervention in the foreign exchange market, in order to stabilize the market or achieve monetary policy objectives.

However, the Bank of Albania argues that the aim of its interventions is not to protect any particular exchange rate level, but to dampen the speed of this phenomenon. The achievement of this objective was deemed useful, because the shallowness of the domestic foreign exchange market was a prerequisite for increased exchange rate volatility and – in extreme cases – potentially even for its deviation from fundamentals. However, according to the Bank of Albania, this intervention does not violate the free exchange rate regime applied in Albania.

An additional influence on the strengthening of the Lek this year has been the tightening fiscal policy of the Albanian government, characterized by a large budget surplus. For the 10-month period of 2025, this surplus reached the value of almost 49 billion Lek. As has regularly happened in recent years, it is expected that the budget deficit will be spent in its entirety in the last days of December. This may bring a temporary rise in the Euro exchange rate in the coming days./ Monitor.al