The euro has experienced a sharp decline against the Albanian lek over the past decade, falling from an average exchange rate of around 140 lek in 2015 to below 100 lek in 2025. During the first five months of 2026, the euro traded at an average of 95.6 lek, continuing its downward trend.
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While tourism is often seen as the primary reason behind the euro's depreciation, market data and economic indicators suggest that Albania's construction boom and increased foreign currency inflows have become the dominant factors driving the exchange rate.
Construction Boom Emerges as a Key Driver
Between 2021 and 2024, Albania recorded a historic surge in construction activity, with annual building permits covering between 2.1 million and 2.7 million square meters. Analysts note that this period closely coincides with the euro's sustained decline against the lek.
Data for 2026 indicate that the trend is continuing. Revenue collected from the country's infrastructure tax suggests that approximately 2 million square meters of new construction permits were issued during the first five months of the year alone.
Much of the residential construction sector has been financed through third-party funding arrangements and payment obligations to suppliers and clients, rather than relying exclusively on traditional bank loans. This financing model has contributed to the circulation of substantial liquidity within the economy.
Tourism and Remittances Continue to Increase Euro Supply
In addition to construction, Albania's traditional economic fundamentals have also strengthened.
According to official data, the country's current account deficit has improved significantly, supported by record tourism revenues and remittances from Albanians living abroad.
During 2025, Albania recorded a net travel surplus of €2.7 billion, while remittances reached €1.1 billion. These large inflows of foreign currency have increased the supply of euros in the domestic market, placing additional downward pressure on the exchange rate.
A Combination of Factors
Economists generally view the euro's depreciation as the result of several interacting factors rather than a single cause. Strong tourism performance, higher remittances, increased foreign currency circulating through the construction sector, and broader economic trends have all contributed to the strengthening of the Albanian lek in recent years.
The exchange rate remains one of the most closely watched indicators in Albania, affecting exporters, importers, households receiving remittances, and businesses operating in both the domestic and international markets.