TIRANA, Aug 17 /ATA/ – Albania’s lek continued to strengthen against the euro in the second quarter, with foreign direct investment rising 12% and adding to the supply of foreign currency in the domestic market, the central bank said.
The average exchange rate fell to 94.8 leks per euro in June from 96 leks in March, with the Albanian national currency strengthening by an average 0.4% per month, according to Bank of Albania data.
Year-on-year, the lek’s appreciation accelerated to 3.2% in the second quarter, from 2.6% in the previous quarter.
The trend strengthened further in July. In the first three weeks of the month, the average euro/lek exchange rate fell to 93.8 leks, representing a 4% annual appreciation of the lek, the central bank said.
The Bank of Albania linked the strengthening partly to increased foreign-currency inflows into the economy. Foreign direct investment rose 12%, boosting the supply of foreign currency in the domestic market and contributing to earlier appreciation pressures.
“Combined analysis of foreign-exchange market data and balance-of-payments data through the first quarter reconfirmed the close link between trading volumes in the foreign-exchange market and flows from trade in goods and services with abroad,” the central bank said.
The strengthening of the lek remains one of the key developments in Albania’s foreign-exchange market as rising inflows increase the supply of foreign currency.
The central bank said the lek’s appreciation and the decline in the euro/lek exchange rate reflected structural changes and a new configuration of the Albanian economy, with foreign-currency inflows increasing domestic supply.
Higher foreign direct investment, tourism revenues and other foreign-currency inflows have contributed to the pressure for further strengthening of the domestic currency, it said.
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