BoA bought 663 million euros, but there is no explanation why and for what?

BoA bought 663 million euros, but no explanation is given as to why and for what?In the first half of 2026, the Bank of Albania bought 663.6 million euros: 143 million through auctions to increase the reserve, 381 million directly on the market for monetary policy and financial stability, and an additional 139.6 million from the auctions of the first quarter.

The interventions show a significant presence in the foreign exchange market, but do not clearly distinguish how much is bought for reserves and how much to influence the exchange rate.

Operations with different purposes are treated together, making their separate analysis impossible.

The BoA declares a flexible exchange rate regime and justifies the interventions with avoiding disorders, adapting to macroeconomic factors and managing reserves.

But, if the strengthening of the lek comes mainly from real factors, why intervene on such a large scale?

Where is the criterion that separates market stabilization from deliberate exchange rate suppression?

The lack of a clear and published limit makes interventions discretionary.

Even more problematic is the lack of public analysis.

Where is the assessment of the effect on inflation, exports, domestic production and competitiveness?

A strong lek facilitates imports, but harms exporters. The delayed quarterly publication provides only the volume of transactions, not the motives, intervention thresholds or results.

Given that interventions of this scale are not explained by the formal balance of payments and recorded flows, it is understandable that they reveal that the BoA is managing not the declared economy, but the informal economy, undeclared money and pressures coming from outside official channels.

But does the perception that these interventions are forced by the presence of the informal economy and money hold up? From the ongoing analysis based on the data, it is estimated that the interventions are significantly influenced by the informal economy and money. The argument is simple and strong.

The formal Albanian economy, which includes registered exports, declared foreign direct investments, bank remittances and invoiced tourism, does not produce sufficient and sustainable pressure on the exchange rate to justify purchases of almost 664 million euros in six months.If official flows were sufficient and balanced, the exchange rate would find equilibrium without the need for such interventions. The fact that the BoA intervenes systematically shows that the real pressure comes from outside the formal balance.

The main sources of this pressure are:

– The informal economy and undeclared money. A large part of the circulation of foreign currency in Albania does not pass through banks. Construction, retail trade, services and some segments of tourism continue to operate with cash in euros. These flows do not appear in balance of payments statistics, but directly affect the supply of foreign exchange on the market.

– Undeclared remittances and informal transfers. A portion of emigrants’ remittances still enters outside banking channels. This money increases the supply of the euro without being recorded as a formal flow.

– Speculative capital and “hot money”. In periods when the lek strengthens, investors can bring short-term capital to Albania to benefit both from higher interest rates and from the possibility that the lek will further gain value against foreign currencies, thus increasing their profit when the money is converted back into euros.This capital is not a productive investment, because this is the flow that the central bank treats as “disorder”, but which is in fact a consequence of its own policy.

– Lack of depth of the formal market. The Albanian foreign exchange market remains shallow. Any large informal or speculative flow creates fluctuations that the BoA considers “disorders,” whereas in a deep and formal market they would be absorbed without intervention.

Thus, the BoA’s interventions are not simply a reaction to the formal economy. They are an attempt to manage the supply of foreign exchange that comes from outside the banking system and from outside official statistics. The larger the informal economy and the weaker the formal channels, the larger and more frequent the interventions become. In this sense, large purchases of foreign exchange are a symptom of the failure of formalization, not of the success of monetary policy.

Given that the motives of the interventions and their results are not made fully transparent, the Bank of Albania remains in the role of a stabilizer of the foreign exchange market, where a part of the transactions does not pass through formal channels.