ALL - Albanian Lek

Characteristics of the Albanian Lek

Lek was derived from the Albanian word Leka, which was the shortened named for Alexander the Great. Alexander's image was featured on the front side of the 1 Lek coin, with the back depicting him riding his horse.

The value of the Lek is influenced by factors such as remittances, the development of the tourism industry, and international monetary policies. 

Although Albania is making efforts to integrate into the European Union (EU), the Lek remains the official currency, and the country currently has no plans to transition to the Euro in the near future.

Lek Albania denominations

Currently, the denominations of the Albanian Lek in circulation are as follows:

• Coins: 5 Lek, 10 Lek, 20 Lek, 50 Lek, 100 Lek

• Banknotes: 200 Lek, 500 Lek, 1,000 Lek, 2,000 Lek, 5,000 Lek

Albanian Lek coins and banknotes feature distinctive designs that represent the country’s heritage and prominent figures.

Issuing and Managing Authority of the Lek

The Lek is issued and managed by the Central Bank of Albania (Bank of Albania). BoA is responsible for implementing monetary policies, controlling inflation, and maintaining currency stability. Additionally, it takes measures to regulate exchange rates and manage the country’s foreign currency reserves.

 

The history of the Albanian Lek

Before the official introduction of the Lek, Albania adhered to a gold standard for fixation of commercial values. The Ottoman Turkish piastre, Austro-Hungarian krone paper notes and some other currencies were in circulation in different parts of the country until WWI.

From 1926 to 1939, the Albanian Lek was still adhered to the gold standard, but with Lek banknotes being convertible to gold. During this period, the primary unit of Albanian currency was the franga ari (translated as “gold franc”), valued at 5 Lek and subdivided into 100 qindar ar (gold cents). With gold standard, the Lek witnessed little inflation prior to 1939, and the volume of currency in circulation stayed largely unchanged. 

In 1939, the Italian invasion of Albania was launched, inevitably leading to the confiscation of the entire country’s gold reserves of total 300,000 gold francs. Coupled with the introduction of Italian lira in Albania, this brief military campaign led to significant inflation and the devaluation of the Lek.

After Albania transitioned from communist economic model to a market economy in the early 1990s, the Lek faced significant challenges, including high inflation. By 2002, the Bank of Albania implemented major reforms, introducing a new version of the Lek, phasing out old denominations, and restoring the currency’s value.

The current value of the Albanian Lek

The value of the Albanian Lek can vary over time, influenced by factors like the state of the economy, inflation rates, and the Central Bank's monetary policies. Currently, the Lek is viewed as a fairly stable currency in the Balkan region, despite experiencing some minor fluctuations.

Exchange Rate Regime of the Albanian Lek – Managed Float

The Central Bank of Albania adopts a managed floating exchange rate policy to regulate the value of the Lek. To put it in other words, the value of the Lek is not fixed or pegged to any specific currency but is determined by supply and demand in the foreign exchange market.

However, the Central Bank of Albania intervenes in the market when necessary to maintain economic stability, especially during periods of major fluctuations.

This managed floating exchange rate regime is based on a currency basket from major trading and financial partner countries of Albania. The main objective of this managed float policy is to control inflation, promote economic growth, improve the balance of payments, and strengthen foreign exchange reserves.

Factors impacting on Exchange Rate of the Albanian Lek ALL

Albania's potential accession to the European Union could significantly influence the value of the Albanian Lek. If Albania becomes an EU member, the eventual adoption of the Euro may introduce periods of volatility in the exchange rate, as the economy adjusts to the transition from the Lek to the Euro. Historically, such transitions can create fluctuations as markets respond to the uncertainties and opportunities of monetary change. 

Additionally, Albania's heavy reliance on remittances from citizens working abroad bolsters the inflow of foreign currency, which has a stabilizing effect on the Lek by supporting its value. On the other hand, inflation rates in Albania, though relatively moderate, remain a critical factor. Higher inflation could erode purchasing power and negatively impact the currency's stability, while well-managed inflation can help maintain the currency's relative strength in the region. 

Types of Albanian Lek currency

The Albanian Lek holds a modest position in global finance, primarily reflecting Albania's small, developing economy. Unlike major global currencies such as the US dollar, euro, or British pound, the Lek is not widely traded in international markets or used as a reserve currency by central banks. 

Albania Lek coins

Throughout the country’s history, the Lek coins come in different denominations and materials.

• First Lek: the coins were made of bronze, come in denominations of 5 and 10 quintars and nickel coins (¼, ½, and 1 Lek), featuring King Zog. During the Italian occupation from 1939 to 1941, new coins were introduced with a fixed exchange rate to the Italian lira. After the Communist takeover in 1947, older coins were replaced by zinc coins (½ Lek, 1 Lek, 2 Lek, 5 Lek), all featuring the socialist national crest.

• Second Lek: In 1965, Albania implemented a confiscatory monetary reform at a rate of 10:1, leading to the introduction of new aluminum coins in denominations of 5, 10, 20, and 50 qintars, and 1 Lek.

• Third Lek: In 1995 and 1996, a new series of coins was released in denominations of 1 Lek, 5 Lekë, 10 Lekë, 20 Lekë, and 50 Lekë, with a bimetallic 100 Lekë coin introduced in 2000. 

Albania Lek banknotes

Similar to the Albanian Lek coins, the Lek banknotes also come in various denominations and have gone through three distinct phases. 

• First Lek: banknotes were first issued by the National Bank of Albania in denominations of Fr.A. 1, Fr.A. 5, Fr.A. 20 and Fr.A. 100. 

• 1992 series: Lek banknotes came in denominations of 1 Lek, 10 Lek, 50 Lek, 100 Lek, 200 Lek, 500 Lek and 1000 Lek.

• 1997 series: Lek banknotes came in denominations of 100 Lek, 200 Lek, 500 Lek, 1000 Lek, 2000 Lek, 5000 Lek.

2019–2022 series: denominations of 200 Lek, 500 Lek, 1000 Lek, 2000 Lek, 5000 Lek, 10000 Lek.