Foreign currency is one of my favourite subjects. I spent years in Nordea’s foreign exchange (FX) department where our clients were some of the largest businesses in Northern Europe. However, sudden currency movements can wreak havoc not just to large companies’ pockets, but to expats and retirees as well.
If, like many of our readers, you’re an American expat living in Albania, or planning to relocate here, you may have noticed recently that your US dollars don’t stretch as far as they recently did. With EUR/USD currently changing hands, understanding the reasons behind this currency shift and learning how to mitigate its impact is essential.
Why Is the Dollar Weakening?
Let’s rewind for a second. For most of the past decade, the US dollar was strong against the euro. Europe had gone through some tough economic times—especially during the 2012–2014 debt crisis, and the euro was relatively weak. In fact, the euro and dollar were trading nearly 1:1 for a while, which was great for Americans living or traveling in Europe.
But that’s changing.
Several factors have come together recently to weaken the dollar. Political uncertainty in the US, shifting trade dynamics, and investor concerns about long-term economic performance are all playing a role. Financial analysts are noticing a shift away from the “safe haven” status the US dollar once had. As one Nordea analyst put it, markets don’t like uncertainty, and when there’s too much of it, currencies take a hit.
While no one can predict the future of currency markets (and if they say they can, maybe ask them for this week’s lottery numbers too), short-term volatility looks likely to continue through the rest of 2025. Longer-term trends into 2026 and beyond will depend on how the US handles its economy, trade, and monetary policy.
What Does This Mean for Expats in Albania?
A weaker dollar affects your daily life. Every 10% drop in the dollar’s value against the euro can reduce your spending power by the same amount. So, if the rate hits 1.20, you could feel an extra 7–8% pinch on your expenses.
And while Albania remains one of the most affordable countries in Europe, that affordability is closely tied to your exchange rate if you’re bringing in foreign income.
What You Can Do to Protect Yourself
Here are a few strategies to help reduce the impact of currency swings:
Hold Some Euros (or Lekë)
If you’re relying on USD income, it might be a good idea to convert a portion into euros or lekë now, while rates are still manageable. That way, you won’t be forced to convert at a bad time.
Use Smart Platforms Like Wise or Revolut
These platforms let you exchange money at much better rates than most banks and with significantly lower fees. (Traditional banks often charge 3–5%. Wise and Revolut? Around 0.5% or less.)
Hedge Your Investments
If you’re investing while living in Albania, consider euro-hedged or multi-currency options to limit exposure to a weakening dollar. There are ETFs (like IBTM) that protect you from currency shifts without changing the underlying investment.
Try “Laddering” Your Currency Exchanges
Rather than converting all your savings at once, spread it out over time. For example, convert smaller amounts monthly to maintain a steady euro/lekë buffer. This helps average out the exchange rate and avoids panic during volatile periods.
Minimise Exchange Fees
Every percentage point counts. Avoid converting your money through banks that take a big cut. Services like Wise don’t charge setup or monthly fees and often give you the real exchange rate.
Bottom Line: Don’t Panic, Plan Ahead
Currency markets can feel unpredictable, but that’s nothing new. If you stay calm, think long term, and take a few proactive steps, you can reduce the impact of these fluctuations and enjoy life in Albania with less financial stress.
Albania remains a budget-friendly option in Europe for retirees, remote workers, and anyone looking for a high quality of life without high costs. Currency fluctuations are a part of the journey, but they don’t have to define it.
