33.20 million euros were purchased from the foreign exchange market - Did the strengthening of the lek indirectly soften? The BoA organized a three-month auction for the first time
In order to increase foreign exchange reserves, the Bank of Albania purchased 33.20 million euros during the first 3 months of 2025.
The Central Bank maintains a foreign exchange reserve to meet the government's needs for foreign exchange to repay external debt, to support international trade, by meeting the demand for foreign exchange originating from importers, and to enable the Bank of Albania to intervene in the market, with the aim of preventing and mitigating strong exchange rate movements.
As announced at the end of 2024, the Central Bank has conducted three auctions for the purchase of foreign exchange, where in accordance with the objective of market development, one of them was with the FORWARD option, i.e. through a preliminary agreement to purchase the euro at a future date and with an exchange rate determined at the moment of reaching this agreement.
For the first time, the Bank of Albania has organized a foreign exchange purchase auction with a three-month term, compared to the one-month term used in recent years.
In the three auctions held during the period, 33.20 million euros were purchased with an average of 11.07 million, compared to an average of 14.20 million euros during 2024. The amount purchased was slightly higher than the amount purchased in three auctions at the same time a year ago of 32.60 million euros, indicating that the relatively lower participation of banks is related to seasonal factors.
The Bank of Albania aims to purchase 270-350 million euros from commercial banks this year, about 20 million euros more than in 2024. According to the intervention calendar, the largest number of auctions is planned in the second and third quarters, when euro flows are highest, as a result of income from tourists.
This large presence of the euro in the market has brought many fluctuations in the exchange rate, with the euro depreciating and a large strengthening of the lek. 1 euro continued to be exchanged for less than 100 lek, while only on January 30th would there be a parity of the two currencies.
To buy euros from commercial banks, the Bank of Albania pays lek, thus increasing the supply of lek in the market. So, although it was not a direct intervention to stem the decline of the euro, such purchases usually indirectly affect the smoothing of the exchange rate. In this case, the purchases of foreign currency by the Bank of Albania have not had a major impact on stabilizing the exchange rate.
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