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KESH's purchases take the euro to its highest level since July

2022-10-26 18:02:10Biznes SHKRUAR NGA REDAKSIA VOX
KESH's purchases take the euro to its highest level since July
KESH's purchases take the euro to its highest level since July

The euro continues to appreciate this week in the exchange rate with the lek. According to the official exchange rate of the Bank of Albania, the European currency was exchanged today at 117.97 ALL, the highest level since July 8.

The experts of the foreign exchange market say that the main factor that is bringing about the strengthening of the euro continues to be the purchase by the Albanian Electric Corporation (KESH), for the needs of energy imports. Sources from the market inform that since last week KESH has been buying euros in significant amounts, between five and seven million euros per day. It is expected that KESH's purchases in the foreign exchange market will continue until the end of this week, so it is likely that the appreciation of the euro will continue for several days.

Another factor with perhaps a smaller impact, according to agents, could be the demand for US dollars from hydrocarbon importers. Due to the expectations created for further strengthening of the USD in the exchange rate with the lek, importers tend to create some short-term foreign exchange reserves in the greenback, to cover future purchases of hydrocarbons. The banking sector keeps its currency positions mainly in euros, because the European currency is more liquid in the Albanian market. For this reason, the demand for other currencies generally affects the strengthening of the euro currency.

In cases where there is demand, banks exchange EUR with USD to ensure the required amount of USD, which they sell to interested entities. Then, to close the positions in the European currency, they buy EUR again in the domestic foreign exchange market, increasing the demand for the European currency and influencing the strengthening of the European currency.

Beyond the above factors with a transitory effect, exchange agents say that the foreign exchange market does not show large fluctuations in the ratio of demand and supply for the euro. This means that, with the completion of KESH's purchases, it is likely that the Euro-Lek exchange rate will stabilize, possibly with a downward correction.

Meanwhile, the USD exchange rate has suffered a significant decline in recent days, dropping again to lower values ​​in relation to the Euro exchange rate. Movements of the USD/LEK exchange rate are mainly linked to its USD/EUR exchange rate in international markets. The Euro has regained ground against the USD in recent days, mainly due to expectations for a tightening of monetary policy by the European Central Bank (ECB). It is expected that tomorrow the ECB will increase the basic interest rate by 0.75 percentage points and usually international financial markets move based on expectations. For this reason, the strengthening of the euro precedes the expected move of the ECB./Monitor


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