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What is happening with the Euro? Will the European currency depreciate further?

2024-08-31 11:32:25Biznes SHKRUAR NGA REDAKSIA VOX

What is happening with the Euro? Will the European currency depreciate further?

The devaluation of the European currency in relation to the local currency set records in August. It was converted by less than 100 ALL, closing the month at 99.65 ALL, close to the lowest historical level.

What happened to the Euro? Specialists in the field say that the Euro may continue to depreciate. Although the month of August was considered as the last point of the fall of the European currency, due to the tourist season, it is likely that this trend will continue.

Just a day ago, it was confirmed by the Central Bank that the money circulating outside the banks in Albania has followed the upward trend even during the month of July this year and has registered a record level. According to the data of the Bank of Albania, the money outside the depository corporations has reached about 402.6 billion ALL, or about 4 billion euros, the highest level ever recorded.

This is a clear indicator that the fall of the euro is not due to tourism or remittances, but due to the circulation of money outside the banking system and the informal economy.

During this year, with the objective of increasing the foreign exchange reserve, the Central Bank intends to buy through auctions between 250-330 million euros, but if abnormal situations are observed in the market, this institution can intervene to stabilize the exchange rate of the lek with the main currencies , especially with the euro.

The lek has also strengthened against other major currencies, partly due to the weakening of the euro, which is the reference currency in determining the exchange rate of the lek with other currencies. Referring to historical data, usually the euro has an upward trend after the month of September, due to the decrease in foreign currency inflows in our economy. But the revaluation of properties, according to experts, could lead to a further devaluation of the Euro.

How much does the fall of the Euro damage the economy?

Exports are the most affected sector of the economy by the devaluation of the Euro. Likewise, these exchange rate developments, according to experts, have a negative effect on the tourism sector itself, because all operators who have previous contracts linked to the euro, the purchasing power of this currency is low. But in a broader assessment, the negative impact goes beyond exports because the entire domestic manufacturing industry that competes with the import sector is under tremendous competitive pressure because imports can come to the domestic market at a price many times more competitive than domestic production./ VoxNews


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