Lek’s depreciation temporary, BoA

TIRANA, Dec. 6 – The central bank says the recent depreciation of Albania’s national currency, lek, against Euro and the US dollar is temporary and won’t affect the mid or long-term stability of the country’s exchange rate. “We think the exchange rate will be in equilibrium and each kind of short term pressure will not affect the balance of the currency exchange rate,” Bank of Albania’s governor Ardian Fullani told reporters in a press conference last week.
Warning that the central bank will be careful in watching the situation to prevent possible speculations, Fullani said the mid and long term projection of the stability of lek had also taken into situation the new visa liberalization situation, which analysts say will further weaken lek against the two main hard currencies.
The central bank says the foreign currency inflows will remain balanced considering the country’s flexible exchange rate, the total liberalization of the capital and current account and the open economy. “The Bank of Albania is watching the situation very carefully to create the pre-conditions for a flexible demand and supply,” said Fullani.
His comments came after the considerable ground lek has been losing against both the Euro and the US dollar during the past few weeks.
Data from the central bank’s official exchange rate show euro slightly dropped to 139.02 lek on Wednesday, while USD further climbed to 104.01 lek compared to a couple of weeks ago.
Finance Ministry data show lek depreciated by 8 percent against the US dollar year-on-year during the January-August period in 2010 and lost 5.9 percent against the Euro.
Meanwhile, last August when dozens of thousands of immigrants came home to spend their summer holidays, Lek appreciated by 1 percent against the US dollar but remained at almost the same levels against the European currency.
A stable exchange rate after the 2009 shock, when the national currency, lek, lost 7.5 percent against Euro and 13.2 percent against the US dollar, and the inflation rate in check, have also had their positive impacts in the positive economic growth Albania registered during the first half of this year, says the Finance Ministry.
Few weeks ago, Albania’s business community represented by Konfindustria warned that The European Commission’s decision to grant Albania visa-free travel in mid-December 2010 could bring a considerable depreciation of the Albanian currency, lek, against Euro.
According to Konfindustria, the only solution to this expected situation for the Albanian government is to accelerate the implementation of a full tax amnesty reform, making use of the immigrants’ return to spend their year-end holidays as the best way to be successful in this effort.