The increasing use of Euro cards is affecting the decrease in the exchange rate against the Lek

2025-09-18 07:23:00, Ekonomi CNA

The increasing use of Euro cards is affecting the decrease in the exchange rate

The Euro continues to decline in its exchange rate against the Albanian Lek. On Wednesday, the European currency touched a new historical minimum, at the value of 96.78 Lek.

Sources from the banking sector say that in recent days there has been an accumulation of Euro supply in banks. A large part comes from bank clients, who have created significant currency balances. However, a significant impact, according to these sources, is being brought about by credit card transactions.

These transactions involve purchases or withdrawals in Lek by individuals who have foreign currency cards, mainly in Euro. Card transactions include both cash withdrawals at ATMs and automatic purchases at POS terminals.

When a card issued in Euro currency makes withdrawals or purchases in Lek, for banks this translates into an increase in the volume of European currency exchanges, increasing the supply of Euro. Bankers say that recently there has been a large increase in the volume of these exchanges.

By typology, these types of transactions are mainly carried out by foreign tourists, who use their cards in the payment infrastructure of the Albanian banking sector. This indicates that the increase in the supply of the Euro seems to be largely related to tourism.

According to statistics from the Bank of Albania, the total number of card transactions in the payment infrastructure of the financial sector in Albania for the first 7 months of 2025 reached 29.4 million, 20% more compared to the same period a year earlier. While the value of these operations reached almost 335 billion lek, 17% more compared to the same period a year earlier.

According to these sources, demand for the Euro in recent days appears lukewarm. In general, entities with planned foreign exchange needs tend to make purchases mainly during the summer months, based on expectations that the exchange rate is lower during this period, due to seasonal trends.

An important factor that has curbed the further decline of the Euro exchange rate in the last two years has been the role of the Bank of Albania. Since May 2024, the Central Bank has periodically intervened in the foreign exchange market through direct purchases of Euros, to curb further appreciation of the local currency.

Sources from the foreign exchange market say that the Bank of Albania has continued purchases during September. The figures for these purchases are not yet public, however it is thought that the volume of purchases must have been lower compared to the summer months. Last year, the Bank of Albania purchased approximately 933 million euros in the domestic foreign exchange market.

Planned purchases, in order to increase the foreign exchange reserve, actually constituted only a small part of the total amount purchased. Last year, they reached the value of 283.8 million euros, an increase of 14% compared to the previous year. Meanwhile, direct purchases, aimed at preventing a further decline in the Euro-Lek exchange rate, reached a record amount of 649 million euros.

The Euro-Lek exchange rate has continued to decline this year, albeit at a slower pace than in the previous two years. In mid-March, the Euro-Lek exchange rate was down 2.6%. A year earlier, the annual decline had been around 6.7%.

Balance of Payments data showed that net tourism receipts for the first 6 months of the year increased by approximately 8%. Overall, the current account deficit increased for the second quarter of the year, by 19% on an annual basis, but for the entire 6 months of 2025, it remained in decline, 3.1% less compared to the same period last year.

Another factor with increasing weight in recent years has been the growth of foreign direct investment, especially in the real estate sector. For the first half of this year, foreign investment in property reached about 240 million euros, up 32% compared to the same period a year ago.

In parallel, the decline of the Euro and the strengthening of the local currency in recent years has been influenced in parallel by a more restrictive fiscal policy, with a reduction in the budget deficit and public debt.

For the third consecutive year, the budget balance has remained positive for most of the year. Based on data from the Ministry of Finance, at the end of the 8-month period the budget surplus was 41.2 billion lek. However, the surplus is at lower levels compared to the same period a year ago, down 42%./ Monitor