The euro has fallen to historic lows against the Albanian lek, with its decline showing no signs of stopping. As the December holidays approach and many emigrants return home, experts warn the euro could drop even further in the coming weeks.
(Tir-Fax) – The euro has plunged to historic lows against the Albanian lek, continuing its steady decline without a clear end in sight. With the December holidays on the horizon and many emigrants returning home, there are fears that the currency could reach new lows in the coming weeks.
The euro is currently trading at 98.4 leks, marking a loss of more than 10 leks compared to last year and a staggering 29 leks over the past six years. This sharp depreciation has been particularly noticeable since 2022.
What’s causing the drop?
The euro’s fall is largely due to an oversupply of euros in the market. This influx has come from tourism, foreign investments, remittances, and informal transfers. However, the supply of leks needed to balance out the surplus has been limited. This is largely because the Albanian government only distributes surplus income in December, with consumer spending remaining weak throughout the year.
Who’s affected?
The weakened euro has significant consequences for businesses and individuals. Families receiving remittances in euros, euro depositors, and exporters using euros face the most pressure. As the euro loses value, their purchasing power shrinks, and costs rise.
However, there are those who stand to benefit. Individuals with euro-denominated loans will see lower monthly payments, and importers can buy goods at reduced prices. The Albanian government is also likely to pay less on external debt due to the more favorable exchange rate.
What’s the Bank of Albania’s role?
The Bank of Albania is tasked with overseeing the exchange market, although it operates under a free-market regime. Despite this, the central bank plays an important role in regulating the market and monitoring any instability that may arise.
As 2024 comes to a close, the euro’s decline remains a key issue, with its effects likely to be felt well into the new year.
