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The exchange rate of the euro touches a new historical low

2024-05-02 14:17:34, Ekonomi CNA

The euro exchange rate touched a new historic low today.

According to the official exchange rate of the Bank of Albania, the euro was exchanged on Thursday at 100.31 ALL, the lowest level ever recorded. The euro exchange rate is currently down by 9.7% compared to the same period last year. The previous record was the value of 100.49 ALL, recorded in July last year.

The euro exchange rate started a new phase of decline as early as the end of the first quarter. According to foreign exchange agents, this is mainly due to the increase in foreign exchange inflows which are believed to be mainly related to tourism. Given the dynamics of tourism income, a gradual decline in the rate during the second quarter to the peak of the summer season was expected.

According to agents, the Orthodox Easter holiday this weekend, which is associated with an increasing number of immigrants returning to Albania, especially from Greece, may also have a small impact.

At the same time, the strengthening of the lek is supported by the restrictive fiscal policy that the Albanian government continues to pursue. At the end of March, the budget surplus reached a new historical record for the period, in the amount of 33.4 billion ALL, increasing by 8.1% compared to the same period last year.

The exchange rate of the euro touches a new historical low

Only after the middle of this year, with the anticipated increase in wages and the increase in the pace of capital expenditures, can we expect the budget balance to begin to shrink. However, last year's experience showed a growing surplus until the end of October.

The fall of the euro is keeping other major currencies at low levels as well. The American dollar was exchanged on Thursday at 93.79 Lek, the British pound at 117.31 Lek and the Swiss franc at 102.77 Lek.

Looking at the market trends and the expected supply and demand ratios, logic suggests that the lek will continue to strengthen further in the coming months and the psychological limit of 100 lek will be broken very soon. The fall of the euro or at least the slowing down of this fall in these circumstances seems to be able to be stopped only by the intervention of the Bank of Albania.

The Bank of Albania has repeatedly emphasized that it has no intention of interfering with the free exchange rate regime. However, the continuous decline in inflation in the first months of 2024 may justify an intervention by the central bank, precisely from the point of view of its legal objective of price stability.

While the strengthening of the lek has affected the contraction of imported inflation and has made goods and services purchased abroad cheaper, on the other hand, this strengthening has damaged the exporting sectors of the Albanian economy. This includes tourism, although it has felt this effect less, due to a strong growing cycle of the sector and a record number of foreign visitors./ Monitor.al