Remittances and their impact on exchange rates-a socio-economic perspective

MSc. Elona Fejzaj (Phd candit.)
Faculty of Economy and Agribusiness, AUT

 

Abstract
In an unsustainable economic and political climate, where the state seeks to maintain a balanced level of macroeconomic indicators, foreign exchange rates assume the role of stabilizers. During the recent years, the economic and financial crisis, which included the countries of the region and wide, contributed not a lot in the constant fluctuations of macroeconomic indicators and this fact led, inevitably, to the reduction of the level of remittances. (income from migrants). Remittances are an important determinant of the monetary policy of a country. There is somewhat a right connection between remittances and exchange rates. But up to what level does the strength of this relationship reach and where stands the invisible part of it? Albania is currently facing a low level of remittances and this is mainly due to the drastic decline of the level of employment and so inevitably to the fall of revenues realized in the countries where Albanian immigrants are employed. This paper aims to construct a new framework of this relationship in the current economic, financial and political life of our country and to analyze whether, in addition to these factors, there are also social factors that can change the definition of this relationship.

Keywords: Economic and Financial Crisis, Foreign Exchange, Monetary Policy, Remittances, Macroeconomic Indicators.

 

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