FLASH
Shkruar nga Pamfleti
The exchange rate of the euro against the lek has marked a significant increase on Friday.
According to the official exchange rate of the Bank of Albania, the euro was exchanged for ALL 100.19, reaching the highest level since August 5.
After a gradual decline that started from that date, the euro dropped to the historical minimum of 99.6 ALL on August 20.
In the last three days, the exchange rate returned to growth, while today it again crossed the 100 lek limit, reaching close to the levels where it has remained with a kind of stability throughout the summer season. However, this stability has been the result of the continuous presence in the market of the Bank of Albania.
From May, the central bank intervened with direct purchases in the foreign exchange market to prevent a further drop in the exchange rate. According to the Bank of Albania, a further strengthening of the lek would be detrimental to the inflation target.
In the first half of this year, inflation fell below the central bank's 3% target. According to INSTAT, in July the annual inflation was at the level of 2.1%.
However, in recent weeks, the Bank of Albania seems to have withdrawn from controlling the exchange rate and did not intervene even after the euro fell below the symbolic limit of 100 lek for the first time.
According to foreign exchange agents, the increase on Friday is not related to the intervention of the Bank of Albania, but to a temporary increase in market demand for currency. Rapid and short-term increases in the euro exchange rate have been frequent in recent years, especially in the periods following its drastic declines.
A low exchange rate of the euro creates an incentive to take advantage of the moment and buy, from entities that may need currency in their activity. Even Friday's increase seems to have such characteristics.
The increase in the exchange rate of the euro is also reflected in the exchange rate of other main currencies against the lek. Even the US dollar returned today above the level of 90 lek.
In fact, in the historical dynamics of the exchange rate, an upward shift in the exchange rate after the peak of the summer season is more or less expected, due to the decrease in foreign exchange supply related to tourism.
However, in recent years, the progress of the course has become less predictable, for several reasons.
Inbound tourism is now more time-dispersed and the amplitudes of currency supply between the summer months and other months of the year appear to have narrowed. On the other hand, volatility has also affected the behavior of market actors.
In periods when the exchange rate is particularly low, there is often an increased demand to buy foreign currency in advance, taking advantage of the moment. In some cases this also creates course movements outside historical or seasonal trends.
Another factor that constitutes innovation this year is the intervention of the Bank of Albania, which has produced an almost fixed exchange rate in the period between May and July. For this reason, predicting what the free exchange rate may be, a product of market factors, in the coming months is more difficult.
The data so far shows a high offer of the euro in the foreign exchange market. According to the Bank of Albania, foreign exchange trading volumes increased by 30% in the second quarter of the year. This growth rate was almost three times higher compared to the same period a year ago./Monitor
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