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The foreign exchange reserves of the Bank of Albania reach a record figure of 8 billion euros

2026-08-24 15:56:00Biznes SHKRUAR NGA REDAKSIA VOX

The foreign exchange reserves of the Bank of Albania reach a record figure of 8

Foreign exchange reserves reached a new historical record in the middle of this year.

According to data from the Bank of Albania, the value of reserve assets reached about 7.9 billion euros, increasing by 7.9% since the beginning of 2026 and by 17.2% on an annual basis.

The continuous increase in the value of the foreign exchange reserve is being supported by significant purchases of foreign exchange by the Bank of Albania in the domestic foreign exchange market.

According to official data published so far, for the first three months of 2026, the Bank of Albania purchased around 140 million euros in the domestic foreign exchange market.

This is the highest historical value of the Bank of Albania's purchases in the foreign exchange market for this period of the year. Compared to the same period a year ago, foreign exchange purchases have increased by 320%.

Despite the large purchases by the Bank of Albania, the exchange rate between the Euro and the Lek continues to decline and has touched a new historical record near the level of 92.5 Lek, down approximately 5% annually.

This year, the Bank of Albania will further increase its planned purchases of foreign exchange in the domestic market. It aims to purchase 330-450 million euros through auctions, with the aim of increasing foreign exchange reserves. The purchase target has increased significantly compared to the projections in the range of 270-350 million euros foreseen for 2025.

However, total currency purchases are likely to result in very large values.

In the period 2024-2025, the Central Bank purchased more than two billion euros in the domestic foreign exchange market, with the aim of curbing the continued strengthening of the Lek in the exchange rate.

The change in the value of foreign currency assets is not only related to the volume of new investments, but also to price movements of financial instruments and precious metals in international markets.

As of mid-year, debt securities accounted for 80% of the reserve assets, while cash deposits accounted for 12%. The remainder of the reserve is invested in gold and special drawing rights (SDRs) with the International Monetary Fund (IMF).

In particular, last year's increase in the price of gold had a positive impact on the value of the foreign exchange reserve. In the first half of this year, gold prices have been falling. This has also led to a decrease in the value of gold reserves to 412 million euros, 4.2% less compared to the end of 2025.

However, the decline in the value of gold has been offset and exceeded by new purchases of foreign exchange and by the increase in the value of financial securities in which foreign exchange reserves are invested.

Foreign exchange reserves are an important instrument to cushion potential shocks, related to both the current account deficit and the high level of Euroization of the financial sector in the country.

The IMF mission to Albania, in its latest statement, dated 2025, however, recommended a more cautious approach to the Bank of Albania in further increasing foreign exchange reserves. According to the IMF mission, the benefits of accumulating reserves should be weighed against the increasing opportunity costs, interest rate risks, and potential losses from currency revaluation.

The increase in foreign exchange reserves has brought significant costs to the balance sheet of the Bank of Albania, as a result of the strengthening of the local currency exchange rate. For 2025, net losses from exchange rate changes amounted to 24.1 billion lek. Losses in this item increased by 79% compared to the previous year. (Monitor)


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