According to the official exchange rate of the Bank of Albania, the Euro was exchanged on Wednesday at 107.63 ALL, the highest level since June 19.
Within one day, the Euro exchange rate has increased by 1.61 ALL, while since July 20, when it touched the historical minimum of 100.49 ALL, the Euro has strengthened by 7.1%, proving an extremely high volatility for such a long period of time. short.
The strengthening of the Euro has also recovered the rate of other major currencies.
The American dollar is approaching the limit of 100 Lek and was exchanged on Wednesday at 99.48 Lek, strongly increasing by 2.21 Lek within a day. The dollar touched its highest level since June 7.
The British pound reached the quota of 125.97 lek, the highest level since June 23.
Agents of the foreign exchange market explain the significant growth of the euro with an increasing demand during the last weeks, especially in the business segment. However, according to them, this growth also has a psychological dimension, causing the subjects of the course to begin to create certain expectations. The revitalization of the demand for the Euro has somewhat increased expectations for an increase in the exchange rate, boosting the demand and tightening the supply of the European currency.
The foreign exchange market has gone through such short-term phases several times this year, characterized by a rapid recovery of the Euro-Lek exchange rate. Even in this case, such a large daily increase of the Euro can hardly be explained by normal supply and demand dynamics, but more by a panic phase, which is now becoming more or less common, also due to the volatility of high that the Euro exchange rate has shown this year.
This year, the lek's strong exchange rate positions have played a significant role in mitigating inflationary pressures and keeping interest rates lower compared to the Eurozone.
According to the Bank of Albania, the strengthening of the Lek exchange rate came mainly as a result of the improvement of the Balance of Payments and the increase of incoming foreign exchange flows, especially from tourism. A rate hike will in theory add to these pressures and could dictate a tightening of monetary policy in the autumn.
The rise of the Euro gradually increases the costs for borrowers in foreign currency, in parallel with the increase in interest rates in the European currency.
Meanwhile, the strengthening of the Euro at the moment gives breathing space to exporters, who have suffered significant losses this year as a result of the exchange rate.
However, if it is true that the strengthening of the Lek during this year was mainly motivated by the fundamental factors of the market, as the Bank of Albania estimates, at the moment it is difficult to think that these factors are changing suddenly and the strong growth of the the latter has more features of a transient phase of panic.