BoA expected to purchase 57 mln euro in seven auctions this year
The Bank of Albania plans to buy up to EUR 56 million this year, in order to increase the foreign currency reserve.
In its publication on money market interventions during the first quarter, the Central Bank has also published the auction calendar for buying foreign currency.
There are seven auctions in total that have started in April, with a planned purchase interval of three to eight million euros for each auction.
Auctions will have a high intensity especially in the summer months, where the euro offer in the foreign exchange market is generally higher.
The currency purchase program was announced by the International Monetary Fund in a March report.
The high level of euroization fo the financial system and, in particular, the significant growth of euro deposits in the last two years has led the Bank of Albania to increase the foreign currency reserve.
The financial system is characterized by a high degree of euroization, despite regulatory attempts over the last decade to limit the use of the European currency.
About 60% of lending and 52% of the deposits of the banking system are in foreign currency, mainly in euro.
While drafting a strategy for reducing euroization, the Bank of Albania is prepared to increase the level of security to anticipate the emergency needs of the financial system’s currency.
Currently, foreign exchange reserves serve as an instrument intended to cover foreign currency needs of the economy and to mitigate strong oscillations in the exchange rate.
However, the Bank of Albania intends to increase this reserve while having in mind the stability of the financial system.
The Central Bank does not have foreign currency liquidity support instruments, but, however, special forms of assistance can be applied in exceptional circumstances.
Among other things, such purchases can affect the exchange rates of the currencies in the domestic foreign exchange market.
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