Foreign exchange reserves expanded by 421 million euros - BoA: The exchange rate had a positive impact in 2024. About 64% of it was in euros
During the past year, Albania's foreign exchange reserves reached 6.2 billion euros. In 2024, it turns out that they have increased by 421 million euros compared to 2023, where foreign exchange reserves were only 5.8 billion euros.
At the end of 2024, about 64% of the foreign exchange reserve was in the European currency, while 19.5% was in the US dollar and the remainder in other currencies such as the British pound, the Chinese yuan, or the Japanese yen.
But what were the main factors that influenced the foreign exchange reserve during 2024?
The actions of the Ministry of Finance, which include inflows from grants and loan disbursements, net inflows from the purchase of foreign exchange by the Bank of Albania and interest earned, or transfers for debt service, have for a period contributed to the reduction of foreign exchange reserves.
Also, the actions of second-tier banks and other entities have had a negative impact in the amount of 327.71 million euros, i.e. payments from second-tier banks to their account with the Bank of Albania for the fulfillment of the mandatory reserve, administration of exposures on the balance sheet, etc., transfers from second-tier banks, net inflows on the account of other entities (such as ASD, etc.).
On the other hand, the actions of the Bank of Albania had a positive impact of 896.55 million euros, due to the purchase of foreign exchange from second-tier banks and other institutions, in the amount of 916.55 million euros, net sales of foreign exchange to the Ministry of Finance in the amount of 102.74 million euros, income from interest, coupons, etc. (calculated on a physical money basis) generated from the investment of foreign exchange reserves, as well as transfers in the amount of 10.71 million euros.
Other market factors that have had a positive impact on the expansion of the foreign exchange reserve to 226.09 million euros are the fluctuations in the exchange rate of the currencies that make up the foreign exchange reserve. Also, the revaluation effect on the portfolio, as a result of interest rate fluctuations, is calculated at a positive value of around 69.01 million euros.
The foreign exchange reserve includes all assets in foreign currency. It serves to meet the government's needs for foreign exchange to repay external debt, support international trade by meeting the demand for foreign exchange originating from importers, and enable the Bank of Albania to intervene in the market, with the aim of preventing and mitigating strong exchange rate movements, thus ensuring exchange rate stability.
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