The euro-lek exchange rate "jumps" in one day to the highest level of 2024

2024-03-27 14:37:00, Ekonomi CNA
The euro-lek exchange rate "jumps" in one day to the highest level of
Illustrative photo

The exchange rate of the euro against the lek marked a strong increase today.

According to the official exchange rate of the Bank of Albania, the euro was exchanged on Wednesday at 104.63 ALL, increasing by 1.7 ALL compared to Tuesday.

The euro exchange rate has "jumped" in one day to the highest level of 2024, while last week it marked the lowest levels of this calendar year. Such a strong daily movement of the euro has not been recorded since August last year.

According to sources from the financial sector, the strong growth of the euro has come as a result of purchases in large amounts by specific entities, which are difficult to identify.

Such a large increase in the exchange rate in a single day proves once again that the foreign exchange market in the country is very shallow and fragile. Such strong and short-term rebounds of the euro-lek exchange rate have occurred frequently in the last two years.

The increasing volatility of the exchange rate in recent years may have encouraged more speculative behavior by market participants, which in the conditions of a small foreign exchange market causes large short-term amplitudes. However, the experience of recent years has shown that these moments last for a while and the course quickly returns to long-term trends.

As always, the strong growth of the euro exchange rate has been accurately reflected in the exchange rate of other currencies. The US dollar also increased by approximately 1.6 Lek and reached the highest level since February, at 96.52 Lek. The British pound increased even more, by almost 1.9 lek and reached 121.94 lek, also the highest level since mid-February.

The trends of the external position of the economy available so far do not warn of any organic upward shift of the euro-lek exchange rate.

The current account deficit touched the lowest historical value for the past year. According to data from the Bank of Albania, this deficit decreased to the value of 191 million euros, down 78% compared to 2022. Even the last quarter of 2023 resulted in a significant decrease in the current account deficit, to the value of 232 million euros, approximately half of the deficit recorded in the same period of the previous year.

Moreover, the record annual value of foreign direct investment for 2023, of almost 1.5 billion euros, has exceeded by more than seven times the value of the current account deficit.

With the entry into the second quarter, it is expected that foreign exchange flows in the Albanian economy will increase, mainly as a result of tourism. Experts believe that at this moment it is difficult to identify any factor that can bring about a sustainable increase in the euro-lek exchange rate. Wednesday's rise has all the hallmarks of a panic that is becoming common in the foreign exchange market and follows large and concentrated demands by individual entities for foreign currency. /Monitor

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