Albania’s Currency: The shift from waiting for the euro to recover to adapting business models to a structurally stronger lek

Albania’s Currency: The shift from waiting for the euro to recover to adapting business models to a structurally stronger lek

By S.Xh-Special Correspondent

In an earlier article, this Chamber explored the unusual strength of the Albanian lek against the euro and what it meant for businesses trading, borrowing and saving in foreign currency. That analysis treated the exchange‑rate move largely as a development to watch. Today, with the euro still weak in the domestic market and the lek holding firm, the question is no longer whether this is a temporary episode, but how businesses can adapt their models to this new reality.

 

Over the second half of 2025 the euro has continued to trade at historically low levels against the lek, consolidating the appreciation that began in previous years rather than reversing it. The latest data show the exchange rate broadly in the mid‑ to high‑90s, levels that would once have been considered exceptional but are now becoming the norm. For members of the Albanian–British business community, this has direct consequences for pricing, margins, competitiveness and investment decisions.

 

Why the lek remains strong

 

Several structural forces lie behind this persistent strength. Albania’s tourism boom has brought record inflows of foreign currency, with tourism revenues and a positive net tourism balance significantly improving the country’s external accounts. Remittances from the diaspora and steady foreign direct investment add a further, reliable stream of euro inflows, reducing the pressure on the exchange rate and helping to finance the current account.

 

Domestic policy and behaviour have also shifted. Increased government spending has supported demand and liquidity in lek, encouraging wider use of the local currency in transactions and contracts. At the same time, efforts to reduce the economy’s reliance on foreign currency—so‑called de‑euroisation—have strengthened trust in the lek and promoted its use in lending and savings. Against this backdrop, a euro area struggling with weak growth and only cautious interest‑rate normalisation has found it harder to regain ground, leaving the euro relatively soft against a range of currencies, including the lek.

 

The winners and the pressure points

 

A stronger lek brings advantages. Importers of goods and services priced in euro benefit from lower costs when converted into lek, improving their margins or allowing them to keep prices more stable for customers. Households and companies with euro‑denominated debts see the burden of those obligations fall in local‑currency terms, while the central bank gains a powerful tool against imported inflation.

 

Yet there is another side to this story. Exporters who sell into euro markets, tourism businesses that receive a large share of their income in euro and families whose savings are held in euro watch the value of each euro fall when converted back into lek. Analyses for the 2023–2025 period warn that a prolonged strong lek can squeeze profit margins in tradable sectors, reduce the local value of remittances and make it harder for smaller firms to invest in upgrading their capacity. Waiting passively for the exchange rate to “normalise” is, in this environment, a risky strategy.

 

From reacting to adapting: what businesses can do

 

The emerging consensus among international institutions and market observers is that the lek is likely to remain strong, even if its pace of appreciation slows. Historical data for 2025 already suggest that the currency has moved into a new range and is now stabilising there, rather than snapping back to earlier averages. Forecasts for the next one to two years broadly point to either modest further lek strength or a sideways pattern close to current levels, rather than a return to the 115–120 lek per euro environment many managers grew up with.

 

In this context, the narrative needs to change—from “when will the euro recover?” to “how do we adjust our business model to a structurally stronger lek?”. For exporters and euro‑earners, this can mean revisiting pricing strategies, moving up the value chain, investing in productivity‑enhancing technologies and, where feasible, using financial instruments or natural hedges to better align euro costs and revenues. For import‑reliant and domestically focused firms, a strong lek offers an opportunity to invest in higher‑quality equipment, skills and digital tools that would have been more expensive under a weaker currency.

 

The role of planning, data and new tools

 

Sound planning and better use of data become essential in this new environment. Businesses that regularly monitor their foreign‑currency exposure, run scenarios on different exchange‑rate paths and understand how sensitive their margins are to currency moves will be better placed to respond quickly when conditions change. New digital tools, including artificial intelligence, can support this process by helping managers build scenarios, analyse historical patterns and test the impact of different pricing options in minutes rather than days.

 

For a bilateral chamber like ABCCI, the mission is to translate this macro picture into practical support for members: from briefings on the drivers and likely direction of the exchange rate, to workshops on pricing and hedging, to mentoring from companies that have already adapted successfully. The aim is not to predict every twist in the market, but to help businesses design models that remain viable and competitive across a realistic range of exchange‑rate outcomes.

 

Conclusion: embracing the new baseline

 

Albania’s strong lek is no longer a temporary anomaly; it is a feature of the current economic landscape that brings both opportunities and pressure points for the Albanian–British business community. By acknowledging this shift and adjusting strategies accordingly, companies can move from a reactive stance—waiting for the euro to “come back”—to a proactive one that treats today’s exchange rate as the baseline for investment, pricing and growth decisions. This is the core message of the Chamber’s updated analysis: the era of waiting is over; the task now is to adapt, innovate and compete in a world where the lek is structurally stronger

For more business insights and updates, stay with us at ABCCI.