The US dollar today marked the lowest point in the last 11 years in the lek exchange rate.
The data of the Bank of Albania show that on Tuesday the dollar was exchanged at 100.48 lek, further decreasing by 0.43 points compared to Monday. Compared to a year ago, the US dollar has depreciated by over 12% in the lek exchange rate.
The lek had strengthened significantly against the dollar in the last quarter of last year, dropping to the value of 100.66 lek. In the first months of 2021, the dollar exchange rate recovered reaching near the limit of 105 lek at the end of March; after April, the dollar began to fall again, culminating today at its lowest level since 2010.
According to experts, unlike the euro, the exchange rate of other currencies is not much influenced by the domestic market. The performance of the USD / ALL exchange rate is mainly a reflection of the performance of the EUR / USD exchange rate in world markets and is not related to economic and financial factors of our market. Consequently, the strengthening of the lek against the US dollar is a consequence of the weakening of the US dollar against the European currency in the world market.
On Tuesday, the dollar traded at 0.82 euros, the lowest annual level and also the lowest since 2018. During the first quarter of the year, the strengthening of the dollar was driven by investor confidence that the US economy would recover faster than economies other developed. This belief was based on a faster pace of vaccination, but also very large monetary incentives. At the end of March, the dollar reached its highest point, above the level of 0.85 euros. But optimism in the last two months has been declining. The fiscal stimulus promised by new President Joe Biden and the easing of the Federal Reserve’s stance by pre-inflationary tightening monetary policies have added to concerns about a higher inflationary risk on the US currency. Growing skepticism about the Federal Reserve’s credibility in its mission to keep inflation under control is being touted by experts as a factor that could boost investors’ expectations for higher inflation and consequently a loss of the dollar.
An International Monetary Fund survey has shown that the share of the US dollar in central bank reserves has dropped to 59%, the lowest level in 25 years. When the euro hit the market in 1999, 71% of reserves were held in US dollars.
The euro is falling, although it is rising in the stock market
On international stock exchanges, the euro traded at $ 1,226 today, reaching its highest level since January this year. But, in the domestic market, the euro lost points slightly by 0.02 lek, being exchanged at 123.02 lek and being exchanged close to the lowest levels since before the start of the pandemic. The depreciation of the euro, despite its rise in stock markets, is one of the reasons for the strong fall of the dollar in the domestic market, to maintain cross-border relations with international markets.
The high supply of the euro in the domestic market is evaluated by market operators as the main reason that keeps the common currency weak.
Euro – dollar exchange rate