Albanian Central Bank says that the depreciation of the European currency will continue during the first half of the year

Albanian Central Bank says that the depreciation of the European currency will continue during the first half of the year

Domestic currency, lek, will continue to gain ground against the European currency, euro, for another few months. This was declared yesterday by the head of the Central Bank of Albania, Gent Sejko. “This effect will persist over the first half of 2019; it is, however, expected to wear off in the following period”, he said during a conference on the presentation of the monetary policy decision making. The governor of the central bank admitted that euro will continue to register low values against the lek in the months to come. This phenomenon has been caused by a high supply of the European value in the domestic market and the same thing occurred last year when the euro fell to values ranging from 121 to 122 lek. Let us not forget that the coming months precede the local government elections, which will be held on 30 June 2019. This period is usually accompanied by higher expenditure than the rest of the year. “However, this is expected to wear off in the following period”, the governor of the Bank of Albania said referring to the depreciation of the European currency against the Albanian currency. The head of the central bank also seemed to confirm that the fluctuation of exchange rates between euro and lek will be stabilized after the elections. However, this doesn’t seem to be happening yet. Yesterday, the euro continued to lose ground by falling to 124.28 lek. However, according to the governor, “the exchange rate appeared stable in January, due to a better balancing of demand and supply for foreign currency, and to the response of the Bank of Albania”. “The decline reflected temporary supply-side shocks and a fuller transmission of the decelerating effect arising from the exchange rate appreciation on inflation”, he argued.

“Albanian economy grew by 4.45% in the third quarter of the previous year. Growth was fuelled by the further expansion of private consumption, investments and exports, as well as the annual growth of electricity production. It was reflected in the expansion of activity in industry, services and construction. Available data suggest that the economy continued to grow in the fourth quarter as well, although at a slower pace than in the previous quarters. Our analyses suggest that this slowdown reflects a lower contribution from electricity production, while it is expected to be temporary.”

Base interest rate remains unchanged, central bank leaves it at 1%

The Oversight Committee of the Bank of Albania announced its decision to leave the base interest rate unchanged at 1%. According to this committee, the reason for this has to do with the fact that the monetary policy which is currently being followed remains suitable. This rate reached an all time low in June last year when the central bank decided to drop it from 1.25% to 1%.