Euro hits nine year low against domestic currency at ALL 128.8

The euro hit a nine year low against Albanian Lek.

According to the official exchange rate of the Bank of Albania, the euro dropped to 128.8 Lek, falling below the 129 Lek limit for the first time since February 2009.

In the course of a year, the European currency lost 5% of the value in the exchange rate with the lek.

According to exchange agents, the main reason that motivates the fall of the euro is its high offer on the market.

The explanations for this high offer, present in the market since more than two years, are quite different.

It is believed that a major influx of foreign investments has been a major factor, especially thanks to major projects such as TAP Pipeline or Hydropower Plant on the Devoll River.

Another hypothesis is the increase of foreign inflows from criminal activities.

According to some experts, the new wave of devaluation, started in March, may be linked to the de-euroization strategy, introduced in February by the Bank of Albania.

This strategy may have influenced the expectations of the financial market players, but also of the broader Albanian public, bringing about an increase in euro exchange rates on the foreign exchange market.

Shifts in the euro rate have a major impact on a widely euroized economy, such as the Albanian one.

The weakening of the euro makes imports of goods and services cheaper for Albanians, including tourism abroad.

While borrowers in foreign currency, with revenues in ALL, are paying lower installments due to the exchange rate.

Those who lose are exporters of goods and services, starting from outsourcing companies, call center companies, or even genuine exporters of goods.

In theory, the strengthening of the lek against the euro does not favor incoming tourism, because it makes Albania more expensive for visitors from the Eurozone.

Losses from the depreciation of the euro currency suffer all those individuals who spend in ALL, but have their income in euro or own euro-denominated assets, including bank deposits.

SCAN

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