Euro is plummeting, who is winning and who is losing

Euro is plummeting, who is winning and who is losing
Migrant workers coming from abroad and bank customers who have deposits in euro are losing as a result of the depreciation of the European currency. Meanwhile, this is a good thing for those who have obtained loans from banks and all of those who have made payments in euro

By Eglantina Nasi

“I’m so glad the euro has fallen. It’s been several months that I only pay 33 thousand ALL for my loan installment as opposed to 35 thousand ALL that I used to pay two years ago, when the exchange rate was 140 lek”. Entela N. seems happy while she reveals how the weakening of the domestic currency in the market has helped her gain several euros every month. But her friend, sitting next to her, doesn’t share the same feelings, because she has lost as a result of this depreciation of the euro. In the meantime, she needed to withdraw some of her savings in the bank. “I needed 1000 euro to make a payment in lek and when I withdrew them, I converted them and I got less than before, only 133.6 thousand as opposed to 140 thousand lek that I used to get before. It’s the same amount that I have deposited, but when I convert them into lek, the amount is not the same”, she says.

These are only two out of many such stories that Albanian people have revealed in the recent months, when a sudden drop of the European currency, euro, has been noticed in the domestic currency market, by strengthening lek. According to the figures issued by the Bank of Albania, during the weekend, euro has been sold at 133.6 lek. Therefore, euro has reached the same value of 2009, when the euro plummeted in the domestic currency market, month after month, due to the immediate effects of the global economic crisis.

But who is winning as a result of this situation? According to economy experts, the first ones are those who receive their incomes in lek, but make their payments, such as loan installments or rents for premises, in euro. In other words, if one is paid in lek, but the payments are made in Europe, than more is gained when converted. The opposite happens with those who have savings in the European currency, because when they withdraw them from banks and convert them into lek, they get less than two years ago, when they converted their euros at 140 lek.

On the other hand, the plummeting euro will also cause problems for migrant workers who are expected to come during the summer season in our country. While they will need to convert their euros into lek, they will have less cash in their hands compared to previous years.

EFFECTS

Those who make payments with euro to suffer the most

All of those people who need to make payments in the European currency, euro, are the ones who will suffer the most from the depreciation of this currency against the euro. This includes all of those who purchase properties, as the purchase of properties has traditionally been effectuated in euros in the recent years. But, on the other hand, this includes even those who will go on holiday abroad during this summer season and are obliged to pay for their holidays in the European currency. We can say that tour operators have never announced any offers in the domestic currency, but only in euros. The same thing goes even for those who sell their products abroad, namely exporters.

 COMPARISON

The US currency, the dollar, seems to be more stable than the European currency, euro, in the domestic currency market. This is indicated by the latest figures of the Bank of Albania, according to which, the dollar has seen a gradual increase and decrease in values, compared to the European currency. So, during the weekend, the dollar has been sold at 119.40 lek, preserving stability in the recent month. In fact, this is a progressive increase, compared to 2009, when the euro was culminating. We must recall that during this year, when the impact of the economic crisis was being felt, USD was sold at 94 lek.

History/Euro started its journey with 124 lek

Year 2011 could be considered as the best year for euro, when it was exchanged at 142 lek

 Only 124 lek! This was the official initial exchange rate for the euro in the domestic currency market, when it came out in January 2002. This was the moment when it became the official currency of the European Union and as such, it also started to be used in our country. Year after year, it has increased in value, by reaching its peak in January 2003, when it was sold at 140 lek. Then, its “journey” continued with lower values, to come to the year 2011, which could be considered as the best year for euro. On June this year, euro’s value ranged 141-142 lek. These values were also repeated in 2013, while 2015 marked the start of its fall. In the summer of this year, it plummeted to 133.6 lek!

 

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