Albanian Leke (ALL) and Euro (EUR)

There has never been such a spotlight on Albanian Lek (ALL) as in recent weeks. With the Lek tumbling some 3% against the Euro in Sep 2009, forex traders are nervously sitting at the end of their seats wondering if Albanian Central Bank may just give up on the Lek and advise a switch to the Euro.

The Albanians themselves are asking the same question. After all, the Albanian currency has been under harsh pressure during the whole of 2009, due mainly to high government expenditures and low levels of remittances (the Albanian Leke value diminished by some 12 per cent since January 2009). Being a nation in Europe, it makes perfect sense for Albania to make the switch to Euro. A look at the past decades have also shown that it is the giant currencies that withstood depreciation – mainly the US Dollar, Euro and the Japanese Yen. The most recent global financial crisis that started in Oct 2008 further vindicated this point.

And the numbers speak for themselves. In Jun 2008 before the start of the global financial crisis, the Albanian Lek (ALL) was trading at 128 Leke against 1 Euro. Compare this against the current exchange rate: 1 Euro = 128 Albanian Lek. This represents some 6% drop in the value of the Albanian Lek against the Euro. And this trend is set to continue until there are more visibility from the Albanian Central Bank on how they are going to instill confidence back into the national currency.

For now, tourist will continue to flock in Albania with favaourable exchange rates making travel cheaper.

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