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Euro, the lowest level in 30 years: The strengthening of the lek is lowering prices, but it is hitting domestic production

2023-04-28 20:54:18Biznes SHKRUAR NGA REDAKSIA VOX
Euro, the lowest level in 30 years: The strengthening of the lek is lowering
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The euro has reached the level of 111 lek, marking the lowest historical minimum in 30 years.

According to the Bank of Albania, currency devaluation is a normal market development

"During 2022, the reduction of the trade deficit, the reduction of the current account deficit and a strong increase in remittances and foreign direct investments. All these have made the entrances to the Albanian market to be higher than in 2021. The intervention takes place only in those cases when there are irregularities in the operation of the market, from our analysis we do not find anything like that. " Klodion Shehu, director of financial stability.

However, Albania develops 70% of its foreign trade with the countries of the European Union. Seven business associations have sent a letter to the institutions asking for measures to be taken.

According to them, the devaluation of the currency over the course of a year is causing huge losses. They predict that the long-term negative effects of this development will have the same effect as the infamous year 92, when Albania only imported goods.

"We asked for an in-depth analysis of this situation, to be given some serious answers and to see how it will be done afterwards to normalize it. We have contracts of at least 1 year, if we take it with last year, compared to the same period, the euro has decreased by 10%. So, every enterprise, every month has a decrease of 10%. At the moment when inflation has done its job, business has increased wages, we also face this problem, I say that the future of exporting businesses will be very problematic," says Florian Zeka, representative of the fashion industry.

But, on the other hand, the appreciation of the lek has given two positive effects. Initially, in the reduction of the public debt, which during the first quarter reached quite low levels, while the Bank of Albania informs that the pressure from the prices of imported goods has also decreased./ TCH

 


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