Bank of Albania makes massive currency purchases – 128 million euros in 6 months

During the first half of this year the Bank of Albania has purchased in the foreign exchange rate EUR 128 million. According to a program launched last year, Central Bank purchases have initially been aimed at expanding the foreign reserve. Meanwhile, at the beginning of June, the Supervisory Council decided to launch currency buying operations in order to curb currency appreciation in the foreign exchange rate.

Only in June, the Central Bank has bought over EUR 65 million in the foreign exchange market, thus curbing the strengthening of the ALL and stabilizing the exchange rate between the domestic currency and the euro at the ALL 126 level. While in the five foreign currency auctions, in order to increase the foreign reserve, a total of 63 million euros were purchased.

Given the relatively modest foreign exchange market size in Albania, the size of the Bank of Albania intervention is very large. It is believed that during July and August foreign currency purchases may have had even higher values, given the increased foreign currency supply, typical for the summer season.

Foreign currency purchasing operations aim at eliminating foreign currency surpluses in the market and curbing further exchange rate strengthening, which, at the Bank of Albania’s judgment, would undermine the inflation target fulfillment. Strengthening the lek against the euro weakened foreign pressures for price increases, hindering inflation growth to the 3% target which was targeted by the Bank of Albania.

SCAN

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