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Euro strengthens against the lek, reaches its highest level since October last year
2025-01-28 18:12:59 / EKONOMI&SOCIALE
The euro is gaining ground in the exchange rate against the lek in the last days of January. According to the official exchange rate of the Bank of Albania, the European currency was exchanged for 98.75 lek, up by 0.55 lek in the space of a week.
The euro-lek exchange rate has reached its highest level for 2025 and at the same time the highest since October 16 of last year.
According to foreign exchange agents, the increase in the euro exchange rate in recent days has been mainly due to an increasing demand for foreign exchange purchases by commercial companies for their needs. In the previous 2-3 years, businesses had a tendency to increase their demand for foreign exchange purchases as early as the end of December, perhaps also as an attempt to benefit from the low exchange rate levels.
This coincided with the increase in budget expenditures in the last days of the year and the increase in the supply of lek in the market.
In December last year, this did not happen and the exchange rate remained at low levels, and the Bank of Albania even made purchases in order to avoid further decline until the last days of the year. Apparently, this year the demand for foreign exchange from businesses is appearing more delayed, in line with the consumption cycle in the economy and the expected increase in the need for imports in the coming months.
Despite the increase in recent days, the euro exchange rate remains in an annual decline of approximately 5%.
The euro-lek exchange rate closed 2024 at 98.15 lek, very close to the all-time historical minimum level, recorded in November 2024. In the first weeks of January, the rate appeared stable near the level of 98.2 lek, while in recent days it has been showing a slight upward trend.
Last year, the average euro-lek exchange rate fell for the fourth consecutive year and hit a new historical low. According to the Bank of Albania, the euro was exchanged on average last year for 100.71 lekë, the lowest level ever recorded. The average euro-lek exchange rate has fallen by 7.4% compared to 2023.
Bank of Albania analyses have concluded that the increase in inflows is mainly due to the increase in the export of services and especially tourism, the increase in foreign investments, especially in real estate, while in his statements Governor Sejko has not ruled out the role of informal foreign exchange inflows.
Balance of payments data showed that foreign exchange inflows for 2024 were also high, but overall the current account deficit increased compared to 2023.
For the first 9 months of 2024, the external position of the economy resulted in a deficit, for a total value of 230 million euros. This position has deteriorated significantly compared to the previous year, with a 9.5-fold increase in the external deficit, but nevertheless this deficit was at the second lowest historical value, after 2023.
According to statistics from the Bank of Albania, foreign direct investments continue to cover the value of the current account deficit. For the first 9 months of 2024, the progressive value of foreign direct investments reached 1.16 billion euros, a figure 6.6% higher compared to the same period a year earlier. On the other hand, fiscal policy has also played an additional role in strengthening the lek in the exchange rate.
The record budget surplus for most of the year has reduced the supply of the local currency and further pushed the euro-lek exchange rate down. According to data from the Ministry of Finance, for the first 11 months of 2024, the budget surplus reached a record 71.7 billion lek, up 90% compared to the same period a year ago.
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