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The possible strengthening of the euro would bring back the wave of price crisis in the country. A study by the Bank of Albania warns that the depreciation of the lek would make imported products especially more expensive.
"The results show that the exchange rate positively affects headline inflation, but the effects are not significant for currency valuation. The main result shows that devaluations tend to have a more pronounced inflationary effect, especially in the highest inflation quantiles . "
A possible return of the euro to the level of 120 lek would also have significant impacts on loans. Loan installments would become more expensive.
“The impact of the exchange rate is more complex: it is negative in the short term and partially reversed over longer time horizons. The lagged effects of credit risk and interest rate gradually fade over time .”
In the study, the Central Bank also highlighted the fact that apartment prices in the country are at least 5 percent higher than normal.
“ It is found that house prices, in mid-2025, were at least 5% above their ‘normal’ levels. Also, preliminary results show that house price imbalances appear to hinder economic growth in the long run, but neither strengthen nor weaken it in the short run .”
Experts emphasize that exchange rate stability remains essential for controlling inflation and maintaining macroeconomic balances, at a time when the Albanian economy remains sensitive to external developments./ A2CNN
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