Is there hope for the euro's growth? Tafa: More monetary policy should be used to soften the exchange rate
The euro-lek exchange rate reached historic lows in July, with 1 euro being worth approximately 97 lek. But what is happening to the euro? Why is the European currency so depreciating, and what consequences could this have for the Albanian economy?
In an interview with Scan Television, economic expert Gjergji Tafa stated that the money brought in by immigrants and tourist income are just some of the main factors contributing to this decline in the euro.
" The euro has long created a kind of expansion in the Albanian economy, for a number of factors. The main factors are remittances, the arrival of visitors, people exploring Albania, and here we normally have inflows of the euro currency and this normally creates a very high pressure on the Albanian economy ," said Tafa.
According to him, a monetary policy should be produced that further helps in smoothing the exchange rate.
" All those businesses that import are in positive results, because they buy at a lower cost, while exports are hit hard. It is a fact that the euro has been performing below 100 lek for about two years, but this does not mean that we necessarily set the exchange rate at 100 lek to have good financial performance. Ultimately, the government is victorious, for the sole reason that the loan installments are paid with less lek, so the government itself is in comfortable conditions, while individuals who have loan installments in euros also benefit. Those who are hit the most are producers and exporters, where the government, whether through the Central Bank, must produce monetary policies in favor of the citizen ," said the expert.
During 2024, the Bank of Albania withdrew around 933 million euros from the domestic foreign exchange market, with the aim of increasing foreign exchange reserves and stabilizing the exchange rate.
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