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What is happening to the Euro? Suffers another historic decline, the dollar touches the highest level since 2017

2022-09-26 18:05:18Biznes SHKRUAR NGA REDAKSIA VOX
What is happening to the Euro? Suffers another historic decline, the dollar
Euro suffers another historic decline

The exchange rate of the euro against the lek fell again on Monday and touched a new historical record. According to the official exchange rate of the Bank of Albania, the euro was exchanged today at 116.32 ALL, the lowest level ever recorded.

The new devaluation of the euro this month, right after the summer season, was a surprise even for market agents. This devaluation started unexpectedly on September 15 and according to experts it was influenced by one of the big banks of the system, which, it seems, has carried out large operations in the purchase of euros.

Initially, this development was perceived as temporary and it was believed that the euro exchange rate could be corrected again near the previous levels, according to 117 lek. But, in fact, such a thing has not happened, even today the euro touched a new minimum.

In fact, the euro exchange rate has not even increased due to the next purchases of the Albanian Electricity Corporation, which, according to sources from the market, made significant currency purchases for energy imports in the second half of last week.

Agents find it difficult to explain such a trend after the end of the summer season, but the fact that the euro remains at these values ​​for approximately two weeks proves that this course basically reflects the fundamental factors of demand and supply in the market.

At least until the end of the 6th month, the country's balance of payments so far is marking the best performance since 2018. Based on the data of the Bank of Albania, for the 6th month of 2022 the current account deficit had the value of 469 million euros, down by 9.8% compared to the same period last year.

Experts hypothesize that perhaps this weakening of the euro can be partially influenced by the relationship between the European currency and the dollar, in international markets and consequently also in the Albanian market. The dollar reached 120.12 ALL on Monday.

This is the highest value that the American currency marks in the course against the lek since May 2017. The American dollar is getting stronger and stronger in international markets, and especially its course against the euro is also reflected in the course with the lek.

Agents believe that perhaps the strengthening of the dollar may have spurred an increase in demand for the US currency and reduced it for the euro in the domestic market. In theory, the fact that the dollar is being perceived as a stronger currency could influence selling of the euro and buying of the US currency.

The developments of the last few weeks are creating more expectations among market agents that perhaps the euro-lek exchange rate has fallen to a new normality and a further decline of the European currency is not excluded. On the other hand, expectations for the dollar exchange rate are in the opposite direction and a further increase of the American currency against the lek is most likely expected, as a reflection of developments in the dollar-euro exchange rate.

The fall of the euro at the moment seems favorable for the Albanian economy, in the conditions of high inflation, mitigating the pressures for price increases from the import markets, bearing in mind that the Eurozone is the main trading partner of the country.

Borrowers in euro with income in lek also benefit, while exporting subjects are mainly harmed by the weakening of the euro.

But, in the meantime, the strengthening of the dollar has a significant impact on the prices of fuel and raw materials./Monitor


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