TIRANA (Albania), May 11 (SeeNews) – The strengthening of Albanian lek currency against major currencies by a nominal 5.5% year-on-year in the first quarter was driven mainly by accelerated economic growth, improved economic prospects and reduction of risk premiums, the country's central bank has said.
The appreciation trend of the lek currency is broadly in line with the changes of the macroeconomic indicators that determine the value of a currency, Bank of Albania bank said in a quarterly monetary policy report on Thursday.
The lek strengthened faster against all basket currencies compared to the previous months, with its appreciation against the euro playing the biggest role, according to the report.
A surplus of foreign currencies generated by various agents or sectors of the economy have dictated the speed of this appreciation in certain periods, the central bank noted.
The Albanian economy maintains its positive development, with economic activity continuing to expand and inflation picking up, whereas monetary and financial conditions remain overall adequate for achieving the inflation target in the medium term, the central bank said.
Bank of Albania also said it expects inflation to converge toward its 3% target within next year and added hat the balance of risks to inflation has shifted further to the downside.
“In comparison to our previous assessments, the convergence of inflation to target will require a more accommodative monetary policy stance in the medium term.”
Based on the available information, the central bank deems that the intensity of the monetary stimulus will not diminish before the second quarter of 2019.
In February, central bank governor Gent Sejko said it will aim to reduce the use of the euro in the financial and economic activities in the country by 10% in the coming three to five years.
The high level of use of the euro in Albania curbs the effect of the monetary policies of the central bank and also poses a risk to the financial stability of the country, Sejko added.
He also also said the central bank will implement measures aimed to reduce the use of the euro in the economy that are part of the so-called the de-euroisation package designed to promote the use of the national currency in economic and financial transactions.