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Euro depreciation breaks new records this summer, near 97.5 lek

2025-07-23 07:34:00, Ekonomi CNA

The exchange rate between the Euro and the Lek is breaking new historical records in recent days.

According to the official exchange rate of the Bank of Albania, the European currency was exchanged for 97.55 lekë, the lowest value ever recorded.

Foreign exchange market agents say that the effect of the summer season has further strengthened the downward pressures on the Euro exchange rate, which have been stable for years in the Albanian economy. An increase in these pressures in this period was expected, considering that the second half of July and the beginning of August also mark the peak of the summer season.

Despite the fact that the Bank of Albania has intervened in the market since May, with occasional purchases of foreign currency, the exchange rate has again suffered a slight decline below the 98 lek mark, recording new historical lows.

Sources from the foreign exchange market say that the Bank of Albania has continued its purchases, with the last intervention being not too long ago, on Monday. However, at best, this intervention has slowed the fall of the Euro, but has not been enough to raise the exchange rate of the European currency.

The Euro exchange rate had fallen slightly below the level of 98 lek since June, but had risen again, mainly thanks to periodic purchases by the Bank of Albania.

However, during July, the Euro has steadily fallen below this limit, which until a few weeks ago had been a kind of target limit (although never officially declared), below which the Bank of Albania had not allowed the Euro exchange rate to fall.

It appears that downward pressures on the Euro exchange rate are continuing to be present this year, even to a greater extent than the Bank of Albania's expectations.

Although the annual strengthening of the Lek has slowed significantly, thanks to the intervention of the Bank of Albania, it is still estimated that the exchange rate may continue to affect the performance of imported inflation and the overall inflation target of the Bank of Albania. The continued strengthening of the Lek is believed to have been one of the factors that prompted the Central Bank to lower the key interest rate to 2.5%, earlier this month.

In addition to the usual seasonal effect, related to summer holidays, foreign exchange inflows into the Albanian economy remain high also from foreign investments, especially in real estate.

On the other hand, the government's austerity fiscal policy, characterized by large budget surpluses, has also contributed to the decrease in the supply of the Lek and the strengthening of the local currency. Preliminary data showed that the budget closed the first 6 months of 2025 with a surplus of 33.5 billion Lek, down 35% compared to the surplus recorded in the same period a year earlier./ Monitor Magazine