European currency is staying in the lowest levels of the past seven years. According to the exchange rate of the Bank of Albania, the euro on Tuesday exchanged with ALL 134.1.
Experts explain the weakening of the euro with the highest bid of the European currency in the market, where the main factor is estimated to be foreign direct investment.
In fact, the nearing of the elections and the beginning of the election campaign could in theory be an influential factor in the exchange rate.
As it is known, election periods are associated with increased spending by political parties, candidates and the government, through increased public investments.
An increase in cash flow, especially in local currency, could affect the balance of supply and demand in the exchange rate.
If there is an added ALL supply in the market, theoretically, this would bring a weakening of the national currency and would strengthen especially the euro, the currency that sees a parallel use in the Albanian economy.
It certainly does not exclude that the election expenses can also be carried out in euros, with an adverse effect of the exchange rate.
However, in the last general elections of 2013, the position between the euro and appreciation were quite different.
In May and June of that year, euro overcame several times the threshold of ALL 141, reaching historically high levels.
However, the strengthening of the euro in that year was not specific to the election period, if we consider that the European currency stood at very high levels throughout the year.
This year, it seems that neither elections are weakening the Albanian Lek, despite the usual increase in government spending.
According to the Ministry of Finance, in the first four months public investment increased by ALL 3.8 billion compared with the same period a year earlier, while from March came into effect the increase of salaries in the public sector.
It remains to be seen what will happen in June, when the electoral campaign will culminate./Scan Tv
