Are BoA policies causing euro depreciation?

Starting from the beginning of February, the Albanian Lek strengthened its position once again against the common European currency, approaching the lowest levels of the last decade.

Regarding the strengthening of ALL, experts give various explanations, but it seems that there is a consensus regarding the high euro offering in the foreign exchange market.

For this high offer there are different hypotheses, including large foreign currency inflows from foreign investment projects and up to an effect from the illegal export of cannabis.

However, an impact on the exchange rate between the euro and ALL may have recently stemmed from the demand side, with a direct involvement of the Bank of Albania.

In its latest report on Albania, International Monetary Fund reports that the Bank of Albania has planned several operations to purchase foreign currency for 2017, with the aim to increase the value of foreign exchange reserves of the economy, but also as an instrument of stabilization, at a time when the expected strategy for the reduction of euroisation of the economy will have effects on the exchange rate.

So far, the Bank of Albania has not released information concerning interventions in the foreign exchange market, although, according to the IMF, the intention to purchase the euro was announced to the actors of financial and foreign exchange market.

As a rule, interventions in the foreign exchange market are announced after the closing of each quarter.

Legally, targeting the exchange rate is not one of the aims of the Bank of Albania, but, however, its operations can influence currency exchange reports in the domestic market.

SCAN

*Material i përgatitur nga portali SCAN. Ripublikimi mund të bëhet vetëm kundrejt citimit të autorësisë dhe burimit origjinal.