The euro has once again fallen to a historic low on the local market, continuing its decline into November, even though the peak tourist season ended long ago.
According to the official exchange rate of the Bank of Albania, one euro was exchanged today at 90.72 lek, losing another 0.03 lek compared with a day earlier.
This is one of the lowest historical levels for the common currency, just 0.08 lek away from the record of 90.64 lek, which was set on 22 October this year.
The fall is steep when compared with 2016, when the long cycle of the lek’s appreciation began. According to Bank of Albania data, on 18 January 2016 the euro reached 139.48 lek, the highest level of that year. At today’s rate, the European currency has lost 48.76 lek, or nearly 35% of its value against the lek.
In other words, 1,000 euros, which were worth around 139.5 thousand lek in January 2016, are today exchanged for only 90.7 thousand lek, or 48.8 thousand lek less.
For years, the strengthening of the lek has been explained by official institutions mainly through the growth of tourism, the inflow of foreign investment and the improvement of the economy’s fundamental factors. But the history of the euro’s decline is longer than the tourism boom, and not all developments can be easily explained by official indicators.
Balance of payments data published by the Bank of Albania, which measure inflows and outflows of currency from sources such as emigration, tourism, foreign trade, etc., show that during the 2016–2022 period, when Albania had not yet entered the current tourism boom, the current account deficit worsened while the euro continued to lose value. The deterioration came mainly because of the trade deficit, with the country becoming increasingly dependent on imports while exports were hit by the euro’s fall. In 2022, net currency outflows from the country were around 1.1 billion euros, or 37% more than in 2016, yet the European currency had depreciated by around 13% over the same period.
Normally, a worsening external deficit would put pressure on the local currency to weaken, not strengthen. However, in Albania the opposite happened.
The euro’s fall appears to have been more strongly linked to the construction permit boom than to the number of tourists, at least until 2024, when accurate permit data is reported. According to INSTAT, the area covered by construction permits reached record levels of 2.1–2.7 million square metres per year during 2021–2024, while the euro continued to depreciate, falling from an average of 137.4 lek in 2016 to 119 lek in 2022 and 100.7 lek in 2024.
Meanwhile, the improvement in the balance of payments from tourism revenues only became noticeable from 2023, when the current account deficit fell to 374 million euros. In 2024, this deficit worsened again, reaching 610 million euros, but the euro still lost 8% of its value against the lek. Only in 2025, when the current account deficit narrowed to 178 million euros, did tourism revenues become a more important factor supporting the strengthening of the local currency.
For exporting businesses and those earning revenues in euros, the continuous depreciation of the European currency has reduced revenues expressed in lek, at a time when domestic costs, especially wages, continue to rise. On the other hand, consumers have not benefited to the same extent from lower import costs.
Ten years after the decline began, the question remains how much of this trend is explained by tourism and the real factors of the economy, and how much by currency flows that are not fully reflected in official statistics./Monitor