Oct 11, 2024 – The Bank of Albania has stepped up its efforts to stabilise the falling euro-lek exchange rate by intervening in the foreign exchange market. Sources indicate that the Central Bank purchased euros on three separate occasions this month—October 3, 9, and 10—though market agents report that these interventions were significantly smaller in scale compared to the more aggressive measures seen during the summer.
These latest purchases were targeted, carried out only with select banks that quoted the lowest purchase rates (bid) at the time. Despite these interventions, the euro continued its downward trajectory, reaching a new historic low of 98.7 ALL on Thursday. While the interventions appear to have slowed the fall, market experts suggest that without the Bank’s involvement, the drop in the euro-lek exchange rate could have been far more severe.
The Bank of Albania first entered the market in May this year, as the euro came under significant pressure. Between May and August, the Bank’s interventions helped mitigate further depreciation, with official figures showing that 272 million euros were purchased during the first half of 2024. This total included 134.2 million euros acquired through planned auctions for foreign reserve purposes, alongside 137.6 million euros from direct market operations designed to support the euro.
Since the Bank temporarily stepped back in August, the exchange rate has remained consistently below 100 lek, a sign that this depreciation is linked to broader economic trends rather than the typical summer inflows of foreign currency. Analysts believe this could indicate structural factors at play in the Albanian economy, with long-term implications for currency markets.
Looking ahead, the Bank of Albania has set a target of purchasing between 250 and 330 million euros by year’s end, primarily to strengthen its foreign currency reserves. Already, it has reached nearly half this goal, having purchased 134 million euros by mid-year—a 15% rise from the same period last year. However, given the sustained pressure on the euro, further interventions may be required to stabilise the currency.
