Foreign exchange trading in Albania reached a historic high, with around €4.5 billion exchanged in the second quarter alone. Despite the increased supply of foreign currency, the lek continues to strengthen against the euro, which has fallen to record-low levels.
Foreign exchange trading volumes in the domestic market reached a new all-time high in the second quarter of the year. Data from the Bank of Albania show that the value of foreign exchange transactions reached nearly €4.5 billion, an increase of around 30% compared with the same period a year earlier.
Foreign exchange trading volumes even exceeded the levels recorded in the third quarter of last year. Due to seasonal factors, the third quarter usually records the highest annual foreign exchange trading volumes. However, this year, last year’s third-quarter figures were surpassed as early as the second quarter, marking a historic record.
Despite the increase in trading volumes, which indicates a higher supply of foreign currency in the market, the lek continued its appreciation trend during the second quarter of the year.
The average exchange rate of the lek against the euro fell to 94.8 lek per euro in June, from 96 in March, representing an average monthly appreciation of the lek of 0.4%. On an annual basis, the lek’s appreciation accelerated to 3.2% in the second quarter, from 2.6% in the previous quarter. The appreciation trend strengthened further in July, when the average EUR/ALL exchange rate fell to 93.8 during the first three weeks of the month, representing an annual appreciation of 4.0%.
Meanwhile, the same trend has continued in August, with the EUR/ALL exchange rate steadily falling below the 93-lek threshold to historic lows. According to the Bank of Albania’s official exchange rate, the euro traded at 92.76 lek on Tuesday, the lowest level ever recorded.
The Bank of Albania estimates that the increase in foreign exchange trading volumes, and consequently the continued strengthening of the lek, remains closely linked to developments in the country’s balance of payments.
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