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The Bank of Albania doubled purchases in the foreign exchange market to 200 million euros

2023-12-28 10:35:13Biznes SHKRUAR NGA REDAKSIA VOX

The Bank of Albania doubled purchases in the foreign exchange market to 200

The Bank of Albania has purchased approximately 200 million euros in the domestic foreign exchange market during the first nine months of 2023.

According to official data reported until the end of the 9th month, the amount of currency purchased has increased by 107% compared to the same period a year ago.

The data show that for nine months the Bank of Albania has bought a total of 182.7 million in auctions planned for the purpose of administering the country's foreign exchange reserves. Only during the third quarter of the year, a total of 66.5 million euros were purchased in these auctions, where the maximum possible amount of 18 million euros was purchased in two of them.

Meanwhile, in addition to the purchases made in the planned auctions, the Bank of Albania has carried out two interventions in the market through direct purchases, in order to prevent disturbances in the foreign exchange rate.

The Bank of Albania bought respectively five million euros on June 9 and 12.1 million euros on July 20, the day when the euro touched the historical minimum level in the exchange rate with the Lek. Including the purchases that were intended to curb the further fall of the exchange rate, the Bank of Albania bought a total of 199.8 million euros during the 9th month of 2023.

During the last quarter of the year, four more auctions were held, where it is estimated that more than 50 million euros were purchased.

During 2023, with the objective of increasing the foreign exchange reserve, the Bank of Albania intends to purchase 220-300 million euros through auctions. Meanwhile, according to the auction calendar, for the next year the amount of purchases in the foreign exchange market is expected to increase further, in the range between 250 and 330 million euros.

The increase in foreign exchange purchases by the Bank of Albania for the years 2023 and 2024 is partially related to the unprecedented strengthening of the Lek in the foreign exchange rate and the need to somehow curb this strengthening. During 2023, the Euro-Lek exchange rate touched the historical minimum of 100.49 ALL, while the annual decline reached 14%.

According to the Bank of Albania, the strengthening of the Lek is mainly related to the significant improvement of the Balance of Payments. For the first time in its history as an open economy, Albania has a positive external balance. In the third quarter of 2023, the current account balance was positive in the amount of 354 million euros, compared to a deficit of 145 million euros that was recorded in the same period a year ago.

This caused the current account balance to be positive in the amount of 28 million euros for the 9-month period. At least since the opening of the Albanian economy, this is the first time that Albania has a progressive positive current account balance.

On the other hand, the strengthening of the lek was also influenced by the government's tight fiscal policy. The fiscal surplus this year has reached the highest historical levels, culminating with the amount of 51 billion ALL in the month of September. This has significantly tightened the supply of Lek in the foreign exchange market.

The lek has continued to remain in quite strong positions during the last quarter as well. On Wednesday, the Euro was exchanged at 103.54 ALL, this level 9.1% lower compared to the same period a year ago. Especially during the month of November, the Euro suffered a significant decline, mainly due to the large sales of the currency carried out by electricity trading companies, in order to pay the next extraordinary tax imposed on them.

Meanwhile, during the month of December, the lek depreciated slightly, mainly due to the large concentration of public expenditures during this month, expenditures that have increased the supply of the local currency in the foreign exchange market.


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