The Euro-Lek exchange rate continues to decline and is approaching the 90 lek mark. According to the official exchange rate of the Bank of Albania, the European currency was exchanged yesterday for 90.64 lek, the lowest level ever recorded. On an annual basis, the Euro-Lek exchange rate has fallen by 6.2%. The Euro is depreciating at the highest rate in the last three years.
Foreign exchange experts believe that the Euro's continued decline is the result of a shifting balance between supply and demand. Euro inflows continue to grow, driven in particular by tourism and foreign investment. On the other hand, demand for the Euro appears increasingly tepid, which can partly be explained by the decline in public confidence in the European currency, after a devaluation cycle that has lasted for more than a decade.
This is also reflected in a shift in real estate price quotations towards the local currency. Meanwhile, lending to the economy is increasingly oriented towards the Lek, especially in the individual segment, gradually reducing the demand for foreign currency for the purpose of paying loan installments.
Nor have the unrest caused by the protests of recent weeks led to an increase in domestic demand for the Euro, as may have happened during moments of political or economic uncertainty in the past.
The Bank of Albania estimates that in general the decline in the Euro exchange rate can be explained by developments in the external position of the economy. For the first half of 2026, the current account deficit decreased by almost 41% compared to the same period last year and at the same time reached the lowest level since 2018. The decrease in the deficit came mainly from the increase in exports of services and remittances. The increase in foreign direct investment is also having an impact on the overall balance of payments. For the first 6 months of 2026, the total value of foreign direct investment reached 1.144 billion euros, with an increase of 50% compared to the same period last year.
Faced with increased exchange rate pressures, the Bank of Albania has further increased its purchases of foreign exchange this year. According to information on money market interventions, during the second quarter of this year the Central Bank purchased a total of 524 million euros, a 224% increase compared to the same period a year earlier. Adding the 139.6 million euros purchased in the first quarter auctions, the total value of purchases for the first half of 2026 has reached 663.6 million euros.
The purchases in the first half of 2026 are following the trajectory of large purchases of foreign exchange by the Bank of Albania starting in 2024. In the period 2024-2025, purchases reached a value of more than two billion euros. Last year alone, the Bank of Albania purchased 1 billion and 27 million euros in the domestic market./ Monitor
