The depreciation of the Euro against the Albanian Lek has been one of the most discussed topics recently. Despite the fact that the Euro is not the basic currency of Albania, this decrease of the Euro compared to the Albanian Lek has also affected the Albanian economy. In the following paragraphs will be shortly analyzed the negative and positive impact the decrease of the Euro has caused to the individuals (individuals living in Albania but having their income in Euro currency, individuals with income in Lek, individuals or families living on remittances, borrowers, Albanian tourists around the world, etc.) and businesses (imports and exports).
The negative impact caused by the depreciation of Euro against Lek:
- Individuals who lives in Albania, but their incomes are in Euro:
- Reduction of the consumer power because with the same amount of Euro, they will buy less Albanian Lek.
- Depreciation of their savings in Euro when they are converted into Lek.
- Lower interest rates for the Euro deposits.
- Individuals/families living on remittances – it is known that a significant part of the Albanian families lives on remittances coming from their relatives, who lives and works abroad, mainly in Italy and Greece. This group is affected since the value of the incoming money in euro does not have the same weight as before when converted in Lek.
- Business:
- The exports are affected since the business contracts are mainly in Euro and a contract for the same value in Euro, but converted to Lek is worth less.
- Individuals whose income is in Albanian Lek, can benefit from the reduction in the price of the imported goods, despite the fact that this has not been substantially reflected towards the consumers, but has started to be applied somehow by large retail trade units.
- Individuals, who have their income in Lek and a loan in Euro, can benefit from lower repayment installments. Since the Lek is evaluated against the Euro, the borrowers can buy more Euros with less Lek.
- Also, individuals who wanted to travel as tourists to European countries, now have the best opportunity to do so, since a ticket or a reservation in Euro can be done by spending less money (considering the category of individuals who have their income in Lek)
- Regarding the business this category is positively affected since the imports made in Euro become cheaper. Imports are very important for Albania, as they cover the largest part of the payments balance.
