Euro closes August at historic low - Average exchange rate at 97.23 lekë, the most contained fall in 2025
The euro is expected to close August near its historic low against the lek. According to the official exchange rate of the Bank of Albania, the European currency is exchanged at an average of 97.23 lekë, while it continues to be under pressure from the high flow of euros into the Albanian economy.
The euro started the last week of August near its lowest historical level against the lek in the domestic foreign exchange market. According to the official exchange rate of the Bank of Albania, the euro was exchanged on Monday at an average of 97.23 lek, very close to the lowest level in history, of 97.13, which it recorded on Thursday of last week. Meanwhile, according to the foreign exchange agency, Iliria 98, the euro was bought on Monday at 96.5 lek and sold at 97.5 lek.
However, the decline during 2025 has been more contained compared to previous years, despite the flow of European currency into the Albanian economy, as a result of the high number of tourists. According to financial market experts, the euro may have already found a new reality, close to, but below 100 lek.
The decline of the euro in the domestic market relative to the lek comes at a time when in international markets, the European currency is trading at over $1.17, which is the highest level in 3 and a half years. However, this strengthening of the euro in foreign markets is not reflected in the domestic market, because the euro-lek ratio is determined mainly by domestic demand and supply.
The euro recorded its highest level this year on January 30, when it was trading near 100 lek, and since then it has lost 2.85% of its value against our currency. In addition to the seasonal effect of the summer holidays, inflows in euros into the Albanian economy remain high, due to Foreign Direct Investment, mainly in real estate, and remittances. According to data from the Bank of Albania, during the first quarter of this year, Foreign Direct Investment amounted to 362 million euros, of which 28.7% or about 104 million euros went to the purchase of real estate.
Exchange rate pressures have forced the Bank of Albania to intervene from time to time, buying euros in the domestic market. After buying a record amount of 932 million euros in 2024, in the first quarter of this year, the Central Bank slowed down, buying only 32.6 million euros. At the same time, the Bank of Albania has undertaken several successive cuts in the base interest rate, bringing it to 2.5%, because inflation has been in the 2%-3% range for almost a year. Theoretically, the Central Bank's monetary policy easing aims to weaken the lek, but apparently this is not happening due to the slow development of financial markets in our country.
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