Euro “sinks” below 92 lek, lek takes the lead / Why the currency is losing ground

The euro is losing ground against the lek, currently trading below 92 lek, compared with 96.5 lek at the beginning of the year.

The strengthening of the Albanian currency also coincides with the peak months of the tourist season, a period when foreign currency inflows into the domestic economy increase significantly.

According to the Bank of Albania, the increase in foreign currency inflows is one of the main factors affecting the exchange rate.

Tourism, remittances from emigrants and foreign investments have brought more foreign currency into the country during July and August. According to official data, more than 7 million foreign tourists have visited Albania.

Experts explain the exchange-rate trend through the relationship between supply and demand in the market. When the amount of foreign currency entering the economy increases, greater supply can put downward pressure on the euro-to-lek exchange rate.

However, the strengthening of the lek does not have the same effect on everyone.

A cheaper euro benefits consumers and businesses that depend on imports. Products, raw materials and services purchased in euros cost less when expressed in lek, helping to reduce costs and ease inflationary pressures.

The situation is different for exporters and households earning income in euros. When the European currency is exchanged for fewer lek, their euro-denominated income is worth less when converted into the local currency.

The Bank of Albania continues to monitor developments in the foreign exchange market, while tourism, remittances and foreign investments remain among the main sources of foreign currency entering the country.

Meanwhile, the Bank of Albania has increased its euro purchases in the market this year. By the end of the year, these purchases are expected to reach €450 million.

“KORÇA BOOM”