TIRANA, Jan. 5 – The depreciation of the Euro against Albania’s national currency in the past few months is having a negative impact on exports, already on a downward trend affected by a sharp cut in international oil and base metal prices.
Albania’s exports extended their decline to 4.8 percent in the first 11 months of 2015 as the Euro dropped to 138.18 lek last November and further depreciated to an average of 137.65, hitting a 40 month-low against the Albanian lek. The depreciation of the euro which has traded at an average of 140 lek in the past couple of years has also affected the country’s exports two-thirds of which are destined for Eurozone countries.
The Euro has depreciated by 2.3 percent since mid-2015 when it traded at 140.82 lek.
Experts explain lek’s strengthening at this unusual time with lower demand for euro as lending has dropped to moderate negative growth rates and imports have slightly contracted.
The national currency, lek, has lost around 15 percent during the past six years against the Euro, the main currency used in real estate lending and trade. In November 2008, when the global crisis broke out, the Euro stood at an average of 123.29. Since then, it has been on a constant appreciation trend against lek, climbing to a historic record high of 141.97 lek in June 2011 and remaining at an average of 140 lek since then.
The depreciation of the Euro against the Albanian lek is good news for borrowers in Euro who have their income in lek and government’s external debt payments but bad news for Albanian exporters who have been affected by Eurozone spillover impacts.
Albania’s exports dropped by 4.8 percent year-on-year in the first 11 months of 2015 on a sharp cut in fuel and base metal international prices which have almost halved in the past year, affecting domestic and oil and mineral production and cutting hundreds of jobs.
