TIRANA, Jan. 16 – Europe’s single currency has gained a slight advantage against Albania’s national currency in the first two weeks of January after hitting a six-year low last December when it fell as low as 134.4 lek, with a negative impact on the country’s ailing exports, already suffering due to a slump in commodity prices affecting oil and mineral prices.
The Euro climbed by almost 2 lek in the past sixteen days to reach 137.23 lek on Monday, but remained significantly below its average level of 139 to 140 lek until late 2015, according to the central bank’s fixed exchange rate.
Experts say the situation is a result of both domestic and international developments. Demand for Euro in the domestic market is currently reported to have increased following the December inflow with the arrival of thousands of migrants from the Eurozone to spend their year-end holiday at home. The hike also comes as the government is seeking to borrow between €40 million to €50 million in two-year notes in a Jan. 20 auction after having borrowed €35 million earlier in December.
The depreciation of lek also comes as the U.S. dollar has also lost some ground against the Euro in the past month.
Some local experts have partly blamed the rising cannabis cultivation and the increased presence of Euro in Albania due to drugs sales abroad for the sharp depreciation of lek against the Euro.
The Albanian economy is highly euroized with euro-denominated deposits and loans accounting for half of the total. The euro is also the main currency used in the real estate industry.
The national currency has also slightly depreciated against the U.S. dollar in the past few months. The U.S. dollar, whose weight on the Albanian economy is much smaller accounting for 10 percent of lending, climbed to 129.49 lek on Monday, in a gradual upward trend in the past five months after hitting a 12-year high of about 130 lek in April 2015.
