This study estimates exchange rate risk between the Albanian Lek (ALL) and the Euro (EUR) using a GARCH(1,1) model and Value at Risk (VaR). Monthly data from January 2012 to October 2024 are used to model time-varying volatility in exchange rate returns. VaR is computed at the 95% and 99% confi - de…

It is widely known that in the exchange rate market there are 3 factors influential to determine the currency exchange rate between the related countries in theory; i.e., the interest rate, inflation, and expectation on the exchange rate. This paper aims to find how the exchange rate between U.S. do…