In this article, we will examine how the fall of the euro is affecting various businesses, what risks an unstable exchange rate brings, and concrete strategies on how to protect yourself against these fluctuations. The EUR\/ALL exchange rate for the period 2023\u20132025.<\/strong>\u00a0The euro has seen a significant decline against the lek over the past two years, reaching historic low levels at the end of 2024 (below 100 lek for a euro) and remaining weak even in 2025. The graph illustrates the trend of the official euro\/lek exchange rate, showing a sharp decline during 2023 and fluctuations at low levels over the last 12 months.<\/em><\/p>\n\n\n\n A weaker euro has had multifaceted impacts on the Albanian economy. For sectors that generate revenue in euros \u2013 such as exporters and tourism \u2013 the lek's overvaluation has created negative pressure. Exporting businesses are among the hardest hit, as they receive euro-denominated revenues while most of their expenses (wages, domestic raw materials, taxes) are in lek. <\/p>\n\n\n\n According to official data, during the January\u2013November 2024 period, the value of Albanian exports fell by about 13.91% compared to a year earlier. Some exporting companies have even declared bankruptcy or have been forced to cut staff or export production to offset losses caused by the euro's depreciation. Likewise, businesses operating in the foreign services sector (e.g., call centers, IT outsourcing) are seeing a decline in leks-denominated revenues, as their euro-denominated contracts are worth less than before.<\/p>\n\n\n\n On the other hand, importers and businesses that purchase goods in foreign currency have benefited somewhat. A favorable lek exchange rate allows them to buy imported products at a lower cost in lek, which potentially increases profit margins or gives them room to lower prices for consumers. The government has also seen a reduction in the stock of public debt in leks, since a large portion of it is denominated in euros. <\/p>\n\n\n\n However, the positive effects cannot soften the shock for many local businesses: the fall of the euro has reduced revenues for key sectors and decreased the purchasing power of individuals who receive payments from abroad. Families that rely on remittances from emigrants have been particularly affected, as the money sent to them in euros is now worth less in lek. Overall, such an unstable exchange rate creates market uncertainty and complicates planning for both businesses and consumers.<\/p>\n\n\n\n To understand the impact more concretely, let's look at some categories of small and medium-sized businesses and how the weakening euro affects them:<\/p>\n\n\n\n Many hotels and accommodation facilities in Albania price their rooms in euros, especially in tourist areas where the clientele is predominantly foreign. The depreciation of the euro means that for the same price expressed in euros, the hotel is converting less lek than before. For example, if a hotel last year earned 12,000 lek from a room priced at \u20ac100 per night, today it might only receive around 10,000-11,000 lek for the same euro amount. <\/p>\n\n\n\n This decrease in revenue harms hotel profits if operating costs (wages, food, energy) are paid in lek. To maintain their margins, hoteliers must either increase prices in euros (which could make them less competitive for tourists) or find ways to reduce costs. On the other hand, tour agencies that operate with incoming tourists face similar challenges - prepaid packages in euros from foreign tourists translate into lower net revenue.\u00a0<\/p>\n\n\n\n Tourism sectors that generate foreign exchange revenue are seeing a reduction in profits and liquidity and may be forced to revise pricing strategies before the summer season.<\/p>\n<\/blockquote>\n\n\n\n Travel agencies and tour operators are affected in slightly more nuanced ways. Those dealing with foreign tourists (e.g., operators bringing in tourist groups from abroad) suffer the same as hotels, because every euro earned gives them less lek to cover expenses in the country. Meanwhile, agencies organizing trips for Albanians abroad might have a short-term advantage: the costs of tourist packages in Europe (hotel, ticket, guide, etc.) become cheaper in lek terms when the euro falls. <\/p>\n\n\n\n This makes it easier for clients to pay in lek and could boost demand for outbound travel. However, this benefit may be limited \u2013 agencies often operate on fixed margins in euros, so their commission or service revenues lose value when converted.\u00a0<\/p>\n\n\n\n In generali<\/strong>, Strong exchange rate fluctuations create uncertainty for the agency sector: it is difficult to set stable prices for long-term packages when the euro can change significantly within a few months.<\/p>\n<\/blockquote>\n\n\n\n Exporters are among those most directly affected by the devaluation of the euro. This includes manufacturing plants (textiles, shoes, agri-food products), mining companies, construction material producers, etc., that sell goods abroad primarily in euros.\u00a0<\/p>\n\n\n\n The main problem is that when the euro falls, they. <\/p>\n\n\n\n For example, a small factory that exports furniture worth \u20ac50,000 per month used to bring in ~6 million lek\u00eb from this amount (at an exchange rate of ~120 lek\/\u20ac years ago), while now it only brings in around 5 million lek\u00eb (at an exchange rate of ~100 lek\/\u20ac or lower). This difference of millions of lek\u00eb can make the difference between profit and loss.\u00a0<\/p>\n<\/blockquote>\n\n\n\n Furthermore, exchange rate volatility makes it difficult to enter into long-term contracts: a contract agreed upon today in euros could result in losses after a few months if the lek strengthens further. Thus, exporters are forced to seek solutions such as renegotiating prices, reducing costs, or orienting themselves towards new markets in order to survive.<\/p>\n\n\n\n Information technology (IT) and business services companies (e.g., call centers, contract services) are also feeling the effects of the exchange rate. Many of them work with foreign clients and are paid in foreign currency (euros. <\/p>\n\n\n\n An IT startup that invoices \u20ac10,000 per month from clients in the EU, at an exchange rate of 120 Lek\/\u20ac, once had 1.2 million Lek to pay for rent, staff salaries, and taxes; today, with the rate below 100, the same invoicing brings in less than 1 million Lek. <\/p>\n<\/blockquote>\n\n\n\n Meanwhile, the wages of local employees may demand an increase to compensate for inflation, which adds financial pressure. The situation becomes even more complicated for BPO (Business Process Outsourcing) services like call centers, which operate on low margins: the depreciation of the euro automatically reduces their turnover and profit, forcing them to either cut costs (usually wages) or move their operations elsewhere. <\/p>\n\n\n\n Some companies may attempt to switch to billing in other, more stable currencies (e.g., US dollars) when possible, but for most IT businesses dealing with Europe, the euro remains the primary reference.\u00a0<\/p>\n\n\n\n In conclusion, export-oriented service sectors are facing the challenge of maintaining profitability amid an unfavorable exchange rate fluctuation.<\/p>\n<\/blockquote>\n\n\n\n The above examples make it clear that a floating exchange rate creates serious risks for businesses. Below are some of the main risks to consider:<\/p>\n\n\n\n Unfavorable exchange rate fluctuations can wipe out the profit margin. A rate change of even 5\u201310 percent can turn a profitable project into a loss-making venture if revenues and expenses are not balanced in the same currency. <\/p>\n\n\n\n As seen, exporters lost billions of ALL in revenue during 2023-2024 due to the euro's depreciation. Without protective measures, your business could face payment difficulties, non-fulfillment of obligations, or even bankruptcy.<\/p>\n\n\n\n Instability in the exchange rate makes it almost impossible to draw up accurate financial plans. Drawing up annual budgets, forecasting income or costs, and setting prices for products\/services become challenging when the value of the currency can change significantly within a few months. <\/p>\n\n\n\n A contract signed today may mean something entirely different after six months if the rate moves by +\/\u201310%. This uncertainty can harm your competitiveness in the market: either set higher prices (to hedge against the risk) and risk losing customers, or keep prices low and risk operating at a loss.<\/p>\n\n\n\n Businesses with currency exposure may face short-term liquidity shortages. For example, if you are paid in euros today but need lek to pay suppliers and salaries, a further drop in the euro before you convert could leave you short of funds for daily operations. <\/p>\n\n\n\n Frequent exchange rate fluctuations can also lead to losses on financial statements when assets or liabilities in foreign currency (e.g., loans, imported inventory) are revalued \u2013 these accounting losses can impact working capital.<\/p>\n\n\n\n Although the strengthening of the lek has benefited importers so far, an unexpected turn of the trend would expose them to the opposite risk. Businesses accustomed to a weak euro may not be ready if the euro strengthens again. A rapid rise in the euro (e.g., from 98 lek to 110 lek) would immediately make imports more expensive. <\/p>\n\n\n\n Importers who have not secured fixed prices or financial reserves may suffer from reduced profits or the need to raise product prices, which could drive away customers. Therefore, even those who are benefiting today must consider protection against fluctuations.<\/p>\n\n\n\n In general, currency volatility increases market uncertainty. Businesses are exposed to an uncontrollable factor that can undermine their efforts, so it should be taken seriously as a risk and proactive measures should be taken to manage it.<\/p>\n\n\n\n Fortunately, there are several strategies and protective measures that businesses can take to guard against foreign exchange risk. Below are some concrete actions you can consider:<\/p>\n\n\n\n When entering into long-term contracts with partners or suppliers, include clauses that provide for price reviews in case of significant exchange rate fluctuations. <\/p>\n\n\n\n For example, it can be agreed that if the rate deviates by more than \u00b151 TPB from the initial level, the parties will renegotiate prices or apply automatic indexing. This clause will protect you from extreme fluctuations and allocate the risk burden between the parties.<\/p>\n<\/blockquote>\n\n\n\n Don't hesitate to review your price list whenever the exchange rate moves significantly. Exporting businesses or those that invoice in euros may need to raise their euro prices to compensate for the lek's depreciation. <\/p>\n\n\n\n Similarly, if you are an importer or sell imported products on the domestic market, you can somewhat lower prices when your costs fall.<\/p>\n\n\n\n The invoicing strategy can help you reduce exposure to fluctuations. If you have only invoiced in euros so far, you can consider invoicing in lek for local or regional clients, thus shifting the risk to the other party (caution: this requires agreement and may not be easily accepted by partners). <\/p>\n\n\n\n Or you could request that payments be made more frequently (e.g., monthly instead of quarterly) to avoid accumulating currency exposure. Another option is to develop an advance\u2010payment policy: if you receive part of the payment upfront, you can immediately convert the amount into the currency you need, reducing the risk of waiting. <\/p>\n\n\n\n Also, negotiate payment methods with your suppliers \u2013 if you have expenses in euros, try to make payments directly in euros (without converting them to lek), creating a natural balance between income and expenses in euros.<\/p>\n\n\n\n Risk diversification is a key principle. If your business relies heavily on the Eurozone market, consider expanding into new markets or segments where you can invoice in other currencies (e.g., US dollars, British pounds, etc.) or even in Albanian Lek. Geographic and currency diversification means that a depreciation of one currency (like the euro) can be partially offset by the stability or appreciation of another. <\/p>\n\n\n\n Also, explore the possibility of expanding your presence in the domestic market for those who have until now focused solely on exports \u2013 domestic sales in local currency can offer a more secure revenue base when the currency fluctuates greatly.<\/p>\n\n\n\n Small and medium-sized businesses often hesitate to use financial instruments, but they can be useful for managing exchange rates. Consider speaking with your bank about products like forward contracts or currency options, which allow you to lock in an exchange rate for future transactions. <\/p>\n\n\n\n For example, a forward contract would allow you to agree today with the bank to buy or sell euros in 3 months at a fixed rate \u2013 this way you know exactly what rate you will have and eliminate uncertainty. <\/p>\n<\/blockquote>\n\n\n\n Some banks also offer multi-currency accounts; holding a portion of your liquidity in foreign currency (e.g., in euros) can serve as a hedge if you expect the exchange rate to move unfavorably (e.g., if you think the euro will fall further, you can immediately convert most of it to Lek to avoid losses, or vice versa). These mechanisms require good management and have their own costs, but for businesses with significant exposure, they are worth it as a type of \u201cinsurance policy\u201d against fluctuations.<\/p>\n\n\n\n Although it's not directly related to the exchange rate, a more financially efficient business is better able to withstand shocks. Review your cost structure and see where you can optimize during periods when the rate is working against you. For example, negotiate prices with suppliers (especially if you buy in euros, ask for a price reduction when the euro falls, since it also costs them less in lek for imports), cut unproductive expenses, and postpone non-urgent investments until the exchange rate stabilizes. Any cost savings achieved can offset part of the loss from currency differences.<\/p>\n\n\n\n By implementing the combination of the above measures, you can significantly reduce your business's exposure to currency risk. The key is to act proactively and not wait for problems to become critical. Every business is different, so strategies should be adapted to the specific situation, but the basic principle remains: do not leave the fate of your finances entirely to the currency market.<\/p>\n\n\n\n Beyond immediate steps, long-term financial planning is essential for managing exchange rate risk. Create "what-if" financial scenarios for the exchange rate: for example, how would your profits be affected if the euro dropped to 95 lek or climbed back to 110 lek? <\/p>\n\n\n\n These scenarios will help you understand your tolerance limits and take proactive measures. Business budgets should incorporate a safety margin for currency fluctuations \u2013 carefully plan your cash flow, leaving a reserve to cope with periods of unfavorable exchange rates.<\/p>\n\n\n\n Also, don't hesitate to seek professional advice. Consult a financial economist, accounting experts, or financial advisors who have experience in foreign exchange markets. A professional in the field can help you identify weaknesses in your current management and suggest tailored solutions (e.g., the optimal debt structure \u2013 loans in lek or euros, hedging strategies with financial instruments, etc.). <\/p>\n\n\n\n Some professional advice may cost you today, but it can save you much greater losses tomorrow. Also, stay constantly informed about economic news: follow the communications of the Bank of Albania, inflation data, and developments in international markets, as these often signal future exchange rate movements.<\/p>\n\n\n\n On a personal level, if you have personal obligations or savings in foreign currency, consider applying these principles to your finances as well \u2013 maintain a diversified savings portfolio (both Lek and foreign currency) and protect yourself from extreme fluctuations.<\/p>\n\n\n\n The fall of the euro against the lek has created significant challenges for small and medium-sized businesses in Albania. The impact has been felt in many sectors \u2013 from seaside hotels, to tourist agencies, exporting factories, and IT companies. <\/p>\n\n\n\n This new reality requires entrepreneurs not to stand idly by. Instead, proactive action is needed: assess your currency exposure and implement the corresponding hedging measures as soon as possible. <\/p>\n\n\n\n Businesses that adapt quickly by changing contract terms, pricing policies, and financial practices will be able to survive this period of uncertainty with minimal damage. Conversely, inertia and negligence can be costly.<\/p>\n\n\n\n Although no one can predict the future of the euro\/lek exchange rate with certainty, preparation and adaptability are your best allies. By planning carefully and seeking appropriate advice, you can turn currency risk management into a competitive advantage for your business.\u00a0<\/p>\n\n\n\n At the end of the day, control over your finances is your strongest weapon to face any storm in the currency market. Don't wait for the situation to worsen \u2013 take action today and secure your business's future against exchange rate fluctuations.<\/p>\n\n\n\n The wise interpretation of the old saying \u201cDon't put all your eggs in one basket\u201d also applies to currencies: diversify, forecast, and protect your business so it can continue to grow sustainably despite euro fluctuations. <\/p>\n\n\n<\/p>\n\n\n\n
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<\/figure>\n\n\n\nThe effects of the euro's fall on the Albanian economy<\/h2>\n\n\n\n
Practical Examples: How the Euro's Decline Affects Different Businesses<\/h2>\n\n\n\n
Hotels and the tourism sector<\/h3>\n\n\n\n
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Travel agencies<\/h3>\n\n\n\n
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Exporting Businesses (Production and Trade Abroad)<\/h3>\n\n\n\n
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IT and outsourcing services<\/h3>\n\n\n\n
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Risks from the unstable exchange rate<\/h2>\n\n\n\n
Financial loss and profit reduction<\/strong><\/h3>\n\n\n\n
Difficulty in planning and pricing<\/strong><\/h3>\n\n\n\n
Cash flow shock<\/strong><\/h3>\n\n\n\n
The counterparty risk for importers<\/strong><\/h3>\n\n\n\n
Strategy to minimize the negative impact of exchange rates<\/h2>\n\n\n\n
Determine the currency clauses in contracts<\/strong><\/h3>\n\n\n\n
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Adapt product and service prices to the times<\/strong><\/h3>\n\n\n\n
Change billing and payment policies<\/strong><\/h3>\n\n\n\n
Diversify markets and currencies<\/strong><\/h3>\n\n\n\n
Use hedging financial instruments<\/strong><\/h3>\n\n\n\n
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Reduce costs and increase efficiency.<\/strong><\/h3>\n\n\n\n
Financial Planning and Professional Counseling<\/h2>\n\n\n\n
Conclusion<\/h2>\n\n\n\n