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Euro recovers after the elections, gains points against the lek

2023-05-15 14:11:36Biznes SHKRUAR NGA REDAKSIA VOX
Euro recovers after the elections, gains points against the lek
Illustrative photo

The euro started the week with a recovery in the lek exchange rate.

According to the official exchange rate of the Bank of Albania, the euro on Monday was exchanged for 111.31 ALL, an increase of 0.49 ALL compared to Friday. The growth of the euro at foreign exchange points was particularly emphasized in the second half of Friday, while it continued to be easier this Monday as well.

In the first half of May, the euro recorded a further decline against the lek, reaching the lowest historical values.

On May 11, the euro-lek exchange rate reached the level of 110.63 lek, the lowest ever recorded. According to foreign exchange agents, the decline was due to large inflows of foreign currency into the market. The increase in the offer of the euro can be partially explained by the emphasis on the seasonal factor and the increase in incoming tourism, but also by the local elections.

According to experts, pre-election periods are associated with increased foreign exchange flows, and the same seems to have happened this year as well, driving the euro's rate to new downward records.

In the last days, however, this decline has been somewhat corrected and this coincides with the end of the election campaign. According to exchange agents, in the second half of last week, an increase in demand for euros was observed in the market.

The fall of the euro to historical lows may have increased the demand for the European currency by entities that have a need for foreign exchange, related to business, repayment of loans in euro, travel abroad, etc.

A similar phenomenon was observed at the end of 2022. After the euro exchange rate touched its historical low, in the last days of December and the beginning of January, a high demand for it was observed and a rapid recovery, although the temporary, of the euro-lek rate.

In that case, the growth was also stimulated by a very large injection of lek into the market by the Albanian government, which spent the entire planned deficit in December, concentrating it especially in the last days of the month.


At the moment, the euro rate has recovered somewhat, but still remains close to historical minimum levels, and agents believe that in the short term, the European currency will remain in weak positions, given the expected seasonal effect.

However, the containment of the fall of the euro gives a kind of breathing space for the time being to the exporting sectors of the economy, which are facing significant losses from the strengthening of the lek. Compared to a year ago, the local currency has increased by about 8% in the exchange rate with the euro./Monitor/


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