Lek strengthens against Euro, loses ground to USD

TIRANA, June 4 – The single European currency hit a record low for this year against the Albanian lek last week when it dropped to 138.2 lek reflecting the tense situation in the Eurozone as Greece’s exit is seriously being considered. The Euro’s ongoing depreciation against the US dollar has also influenced.
The appreciation of the Albanian lek against the Euro is good news for borrowers in Euro who have their income in lek and the government’s external debt payments but bad news for Albanian exporters who are already suffering from poor demand in Italy and Greece. However, the fluctuations seem temporary and small as Euro/Lek exchange rate during the first five months of this year has been above 139 lek level.
This week, the Euro slightly rose again to 138.9 lek, according to the Bank of Albania official exchange rate.
The national currency, lek, has lost around 15 percent during the past 3 years against the Euro, the main currency used in real estate lending. The situation is especially difficult for those persons with income in lek and having to pay loan instalments in euro, which accounts for 60 percent of the total credit.
In November 2008, when the global crisis broke out Euro stood at an average of 123.29. Since then it has been on a constant appreciation trend against Lek, climbing to a historically record high of 141.97 lek in June 2011.
The effect of the exchange rate is another concerning item within the portfolio of Albania’s external debt stock. In 2009 this effect was about 2.03 percent of the GDP. During the next years it was stabilized at 0.13 percent in 2010 and about 0.31 percent of the GDP in 2011, according to a Finance Ministry analysis.
Meanwhile, the US dollar continues appreciating against the Albanian lek climbing from an average of 98.79 lek in May 2011 to 108.96 lek in May 2012. This week the US dollar registered a record high of 111.7 lek for the past two years.