Lek stronger than ever, the devaluation of the Euro and the Pound hits new records
In addition to tourism, foreign exchange flows are being influenced by the revival of remittances and by the high values of foreign investments. The new trend of recent years is the increase in investments of foreign citizens in real estate in Albania.
Exchange agents think that informal flows also remain a factor that has its own influence on the foreign exchange rate. Agents expect that, due to the seasonal effect, the Euro-Lek exchange rate will continue to follow a downward trend at least until the first week of August.
With its strong fall, the Euro is dragging other major currencies behind it.
The British pound has fallen to a new historical minimum of 119.12 lek.
The American dollar has fallen to the value of 91.03 lek, the lowest level since 2009.
The Swiss franc has fallen to the level of 106.11 lek, the lowest level since 2010.
The Euro is the reference currency for the financial sector in Albania and the rate of other currencies is determined by the value of the Euro combined with the exchange rate of the European currency against each of them. In recent weeks, the fall of the Euro against the Lek is accompanied by a fall of the main currencies against the Euro in the international markets. Consequently, this has brought a record drop for most foreign currencies against the Lek.
The strengthening of the Lek in the exchange rate, especially against the Euro, brings significant impacts on the economy. A stronger lek lowers the price of imports of goods and services and in theory exerts downward pressure on import prices and inflation.
The strong lek is also greatly favoring borrowers in foreign currency, shrinking the value of their liabilities in the local currency. The biggest beneficiary among them is the Albanian government itself, which is benefiting from a significant decrease in the debt portfolio in foreign currency.
Por, një forcim në këto përmasa i Lekut po dëmton ato subjekte ekonomike që kanë të ardhura në valutë të huaj dhe shpenzime në Lekë, duke filluar nga eksportuesit. Forcimi i Lekut me rreth 13% në një vit ka një efekt të fortë negativ mbi marzhet e fitimit dhe në këto kushte alternativat janë rritja e çmimeve, shkurtimi i shpenzimeve ose gjetja e mënyrave për të rritur produktivitetin.
Një kategori që po preket ndjeshëm forcimit të Lekut janë edhe familjet e varura nga remitancat. Zhvlerësimi i valutave ka ulur fuqinë e tyre blerëse dhe potencialisht mund të jetë një faktor që do t’i nxisë emigrantët të dërgojnë më shumë para, faktor që, nga ana tjetër, do të krijonte presione të reja për forcimin e Lekut.
The strong lek is increasingly reducing the value of Albanians' foreign currency savings. However, since the Albanian economy is Euroized to a high degree, this factor does not seem to be discouraging much the holding of savings in Euros, as shown by bank deposit data.
Originally published on monitor.al