If asked in early 2023 which global currencies would perform best in 2023, few, if any, emerging market investors – or anyone, including policymakers – would have identified the Albanian lek as a key contender. It is therefore all the more surprising that just over 9 months into 2023, the Albanian lek ranks 6th out of 150 currencies in Bloomberg’s spot performance ranking.
Perhaps not surprisingly, the strength of the country’s currency and its macroeconomic performance are increasingly attracting the attention of international investors in its local currency, the domestic government bond market. Against this backdrop, RBI Group Capital Markets visited Tirana in July to meet with local officials and, equally importantly, Raiffeisen Bank Albania, to ensure that RBI Group can effectively facilitate international investors’ access to capital markets national.
So what explains Albania’s exceptional performance? From a short and medium term point of view, the increase in tourism income constitutes a key element of this positive development. From a medium to long-term perspective, the reinvigorated EU membership prospects of Albania and other Western Balkan countries provide increased visibility for reform and governance.
Tourism revenues are growing not only due to top-down factors such as the resurgence of global or regional demand after the pandemic, but also due to the continued deepening and broadening of Albania’s tourism offering. In practice, this means:
Albania’s tourist season is getting longer and gradually extends throughout the year.
The number of destinations visited by tourists is increasing, as can be seen for example on the official Albanian tourism website.
The accommodation supply is increasing (as well as tourist margins). To delve deeper into Albania’s macroeconomic outlook, we also recommend viewing theby Fjorent Rrushi, Head of Research at Raiffeisen Albania, and his team.
What was our practical experience of Tirana? Hearing about improving prospects for international visitors from managers can sometimes seem far removed from what we ourselves experience on business trips. This was not the case in Tirana, however. Despite the mercury regularly exceeding 37°C during our stay, we enjoyed our stay in the city and rank the quality of the food among the best in the CEE/SEE region.
In the longer term, EU membership represents a key source of long-term visibility for Albania’s economic reform, governance and rule of law. The focus is now on 2030 as the accession date. Our meeting with the EU delegation in Tirana, however, highlighted how many moving parts are needed to make this happen, both from a top-down perspective of EU reform and a bottom-up legislative perspective of Albania.
What is the role of the RBI Group in this project? Raiffeisen Bank Albania is the third largest bank in the country by assets and the main player in the foreign exchange and secondary national government bond markets. This not only puts the bank in a strong position to facilitate domestic clientele as the sophistication of domestic capital markets grows, but also means the group has an advantage when it comes to supporting clients internationals in their Albanian activities. Furthermore, it is worth mentioning that RBI is the only international depository to provide a full range of securities services through its direct access to the Bank of Albania, the central securities depository for national government bonds. With this configuration, RBI Group covers the entire value chain, from trading to post-trade, ensuring a superior customer experience.
In summary: Albania is not only increasingly on the maps of tourists around the world, but it will gradually also appear on the maps of global investors.
To find out more about Raiffeisen Research:
RBI Group Head of Capital Markets Michael Kuen, Head of Fixed Income and Derivatives Trading, Amandus Pernold, Head of Local Currency Bond Trading, and Martin Blum, Head of Capital Markets Development and of office strategy, were welcomed in Tirana by Chris Canacaris, CEO of Raiffeisen Bank Albania, Head of ALM and Research Fjorent Rrushi and Head of Trading Donalda Gjorga.