The Bank of Albania purchased approximately Euro 933 million in the domestic foreign exchange market in 2024. Final data published by the central bank showed that foreign exchange purchases last year reached the highest historical value. The amount of foreign exchange purchased increased by 249% compared to the previous year.

The total value of purchases includes those planned, with the aim of increasing foreign exchange reserves, but also those related to direct interventions in the market, with the aim of preventing further decline in the exchange rate, Monitor reported on Friday.

Planned purchases, in function of increasing foreign exchange reserves, actually constituted only a minority of the total amount purchased. They last year reached the value of Euro 283.8 million, an increase of 14% compared to the previous year.

Meanwhile, direct purchases, aimed at preventing further decline in the Euro-Lek exchange rate, reached a record amount of Euro 649 million. For the first time last year, the Bank of Albania undertook a long-term intervention in the foreign exchange market, to prevent further strengthening of the domestic currency.

Direct purchases began in May and continued until December, with a temporary interruption in September. The month with the highest value of purchases was October when the Central Bank purchased Euro 169.4 million in the domestic foreign exchange market.

The publication of detailed figures by the Bank of Albania on foreign exchange market interventions provides a clearer picture of the central bank's influence on the exchange rate. In the absence of these interventions, the decline of the euro in the exchange rate with the Lek would have been even greater.

The average exchange rate of the Euro to Lek last year decreased by 7.4% compared to 2023. During November 2024, the euro rate recorded its lowest historical level at Lek 98.11, while it closed 2024 very close to this value.

If in 2023 the strengthening of the Lek could be explained by the significant improvement in the current account deficit, for 2024 this factor hardly explains the strengthening of the Lek to this extent. The current account deficit worsened last year and, according to data from the Bank of Albania, the deficit reached the value of Euro 607 million, an increase of 157% compared to 2023.

The current account deficit continues to be covered by inflows to the financial account and mainly foreign direct investments.

According to data from the Bank of Albania, they amounted to Euro 1.58 billion, up 5.6% compared to the previous year.

For 2025, the Bank of Albania has planned a total of 22 foreign exchange purchase auctions, between February and December. The estimated amount of purchases is expected to be between Euro 270 million and Euro 350 million. However, this amount does not include possible direct interventions in the exchange rate, which cannot be predicted.