The foreign exchange reserve is expected to reach 7.2 billion euros by 2026

The country's foreign exchange reserve is expected to increase to more than seven billion euros by 2026.

According to the Government's projections in relation to the 2024 draft budget, during the next three years the foreign exchange reserve is expected to increase by more than 25% and reach almost 7.2 billion euros.

According to the statistics of the Bank of Albania, at the end of the 9th month of 2023, the foreign currency reserve of the country had the value of 5.73 billion euros. The value of the foreign currency reserve has increased by 13.3% or 671 million euros compared to the same period of the previous year.

The foreign exchange reserve is an important instrument to amortize possible shocks, related to both the current account deficit and the high level of Euroization of the financial sector in the country.

Being an economy with a negative trade position, especially in goods, Albania is exposed to situations where securing the necessary currency can be difficult.

One of the main criteria in determining the minimum necessary value of the foreign exchange reserve is the achievement of a value sufficient to cover at least four months of imports, while according to the latest estimates of the Bank of Albania, the country's foreign exchange reserve currently covers more than seven months of imports. being significantly above its minimum targets.

Also, the foreign exchange reserve can serve as an instrument to support the financial sector with liquidity in foreign currency or to stabilize shocks in the foreign exchange rate.

The country's foreign exchange reserve is administered by the Bank of Albania and for the most part

held in debt securities and deposits. At the end of September, debt securities made up more than 75% of the reserve assets, while cash deposits made up 17% of it. The remaining part of the reserve is invested in gold and drawing rights (SDR) with the International Monetary Fund.

The Bank of Albania regularly organizes auctions for the purchase of currency, in order to increase the foreign exchange reserve. This year, the Bank of Albania has planned purchases in the market

domestic currency in an interval between 220 million euros and 300 million euros.

According to the figures reported by the Bank of Albania and the calculations of "Monitor", until now

The Bank of Albania has purchased approximately 220 million euros in the currency auctions held for 2023.

Although in theory foreign exchange auctions are carried out in the service of foreign exchange reserve administration, the Bank of Albania often uses this mechanism also in order to establish balances in the foreign exchange rate./Monitor

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