The European currency has continued to strengthen in the Albanian foreign exchange market during the recent period, according to official rates released by the country’s central bank.
The Euro/Lek rate on Wednesday stood at 133.59, according to the Bank of Albania.
Although the summer period was expected to stimulate the strengthening of the Lek due to higher revenues in foreign currency after Albanians working abroad returned home for the summer, this was not the case.
The trade deficit and current account deficit has continued to rise during the first half of this year, while remittances that are a major source for hard currency in the country have dwindled.
The political opposition has blamed the depreciation of the Lek on extensive government expenditures as the cause of the deprecation. Several thousand families in Albania have borrowed in euro during the last few years and now are paying more for their mortgages. Bank of Albania estimates 70% of lending to the economy by banks is done in euro, while most of the incomes are received in Lek
The Lek experienced its worst day in more then five years on Thursday, due to strong demand for hard currency in the local market.
Its exchange rate with the euro jumped to 133.64 lek for the first time since April 2004, according to data published by the Bank of Albania.
Experts believe that the worst for the local currency lies still ahead due to several seasonal factors. They fear that, due to the shocks in the currency exchange rates, the target inflation rate of below 4% is not possible anymore as imported goods have become more and more expensive.
The Lek has depreciated 8.2 per cent since January and on Wednesday the euro broke the level of 133 Lek, considered by some experts as the resistance level barrier.
