PRESS RELEASE
Questions and answers at the press conference, 4 July 2018

Question: You said the intervention in the market will continue? How much euro will be purchased?

Governor: We do not know and cannot know the amount of euro we will purchase in the market. The purpose of the intervention is to achieve our main objective, to maintain price stability, i.e. the level of inflation. We have determined, according to our analyses, the impact of the exchange rate appreciation in achieving the inflation target. When we assessed that this level of the exchange rate would negatively affect the expected inflation in the short and medium-term – which could have led even to level 0 inflation - the Supervisory Council decided to start an intervention programme in the domestic foreign exchange market, to eliminate the foreign currency surplus, for the purposes of inflation.

We cannot foresee the exchange rate and we cannot define it. Since we cannot define the rate, we cannot define the level of our interventions either. The Bank of Albania has started to implement the intervention programme by purchasing foreign currency in the market. This programme has had a positive effect; through it we have curbed the appreciation of the domestic currency, which was assessed as negative for the reasons I mentioned earlier. We regularly analyse the situation in the meetings of the Supervisory Council to assess the duration and effects of the programme. The future will tell on this. We cannot predict in absolute terms how much we will spend and how long the intervention programme will continue because this depends on the performance of the exchange rate in the future.

Question: Mr Governor, following up on the question of the colleague, how much euro did you purchase in June? In your last press statement, you said that the Albanian market has more euro than lek - in the formal market if you like - also, after the decision which saw 40 foreign exchange bureaus closed down, what was the impact of this measure?

Governor: I will answer the last question first. I can give a figure regarding the amount of euro in the banking system, licensed and regulated by the Bank of Albania. I do not remember the exact figure, but it is over EUR 4 billion, probably EUR 4.3 billion.  But, the market includes both, the formal and the informal markets and we have no data regarding the amount of euros in the informal market. We have data on the amount of lek in circulation. The lek is the currency that the Bank of Albania, as the central bank issues, that is why we monitor the circulation of the national currency. But, we do not know how much euros there are in circulation actually in the market. For the banking system, we know the amount and I previously mentioned it.

In accordance with the Regulation of the Bank of Albania we report on the intervention programme and its amount three months after the end of each quarter. Now we reported on the amount of foreign currency purchase over the first quarter of the year.

Currently, we are implementing an intervention programme due to the impact of the exchange rate appreciation on inflation; however, even before this case we have purchased foreign currency in the market for the purposes of the foreign currency reserve of the Bank of Albania. These transactions may have the same impact since we purchase euro with lek, but our objectives have been different. For transparency, at the end of the relevant quarter, we will report the amount purchased in accordance with the Regulation. Currently, I do not have an exact figure, but the important thing is that the intervention programme managed to curb the exchange rate appreciation.