No hurrah for Latvia's eurozone drive

Unfazed by the eurozone crisis, Latvia is poised to pass key legislation Thursday paving the way for a request for EU approval of its entry as the zone's 18th member on January 1, 2014. But very few Latvians are cheering.

Many are worried the currency switch could bring even more hardship to this ex-Soviet republic of two million people, still recovering from the world's deepest recession in 2008-9, which saw a cumulative slump of 25 percent.

A December survey by DNB bank showed just eight percent of respondents backed rapid euro adoption: 42 percent preferred to wait, while 41 percent opposed the move outright. The remaining nine percent were undecided.

With the national currency, the lats, already pegged to the euro, centrist Prime Minister Valdis Dombrovskis argues that joining the troubled monetary bloc will rev up the economy by easing trade and exchange with Latvia's main trade partners, which are already members.

To sway public opinion, authorities have launched a high-profile campaign pushing the benefits of adopting the euro, a move the opposition has branded as propaganda.

"Everything has a flip-side, which the advocates of euro adoption fail to mention," contends Iveta Grigule, a member of parliament with the opposition Greens' and Farmers' Alliance (ZZS).

"Prices will rise... this has happened in all EU countries that switched to the euro. We aren't an exception."

Latvia's northern neighbour Estonia, which was the first ex-Soviet state to join the eurozone, in January 2011, saw inflation leap five percent that year.

After a three-percent hike in 2010. Prices in the country of 1.3 million rose 3.9 percent last year, according to Bank of Estonia figures.

Fellow ex-Soviet Baltic neighbour Lithuania is aiming to adopt the currency in 2015.

In Latvia, anti-globalist and extreme right-wing groups have become the most vocal opponents to the euro switch, and their shared "Euro No" website casts the European Union as a successor to the Soviet Union.

Despite the eurozone's own ongoing battle for survival, analysts in Riga -- in concert with the government -- insist Latvia's entry will boost investor confidence and growth.

"Our base scenario assumes that Latvia will join the euro area in 2014, which will support confidence and thus promote growth somewhat," Swedbank, the country's largest bank, said in a January 16 assessment.

In Valmiera, an industrial town 110 kilometres (70 miles) north of Riga, the prospect of the switch leaves most underwhelmed.

"It will change nothing whether we join the eurozone or not," Anete Kurpniece, manager of Dodam, a small office providing everything from translations to souvenirs, told AFP.

"In effect, we already use the euro anyway -- the exchange rate (1 lat = 1.43 euros) is fixed and we take euro payments from foreign clients," she added.

Near Valmiera's 13th century castle ruins, at the cosy Liepziedi un Rozmarins trattoriam, its co-owner Atis Zentins, is similarly unfazed.

"We let foreigners pay in euros if they don't have any lats," he says, speculating that the only impact on his business might be to make his payments to Italian suppliers go through slightly faster.

But at the Valmieras Stikls glass fibre factory, the town's major employer and one of Latvia's largest exporters, the mood is more upbeat.

"I think our business will benefit from eurozone membership," chief financial officer Dainis Senbergs told AFP, noting that dealing in euros would be easier for "customers outside Europe, in the USA and Asia."

"Saying no to the eurozone would damage the perception of Latvia among foreign investors," he warned.

Latvian lawmakers are expected to pass key legislation Thursday paving the way for Riga to request a European Commission green light for membership of the eurozone.

Both the European Commission and European Central Bank are set to deliver their verdicts by the middle of the year.

Loading...
 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.2586+0.0005+0.04%
    USDSGD=X
    1.7407+0.0005+0.03%
    EURSGD=X
    2.1148+0.001+0.05%
    GBPSGD=X
    81.3349+0.0428+0.05%
    SGDJPY=X
    6.1607-0.002-0.03%
    SGDHKD=X
    2.6022+0.0038+0.15%
    SGDMYR=X
    9,216.1611-39.8652-0.43%
    SGDIDR=X
    4.9687+0.0017+0.03%
    SGDCNY=X
    1.1668+0.0015+0.13%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,291.70+1.10+0.09%
    GCM14.CMX
    19.57-0.12-0.62%
    SIK14.CMX
    91.62-1.25-1.35%
    ^XAU
    3.120.00+0.11%
    HGK14.CMX
    101.75-0.19-0.19%
    CLM14.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.74+0.03
    ^FVX
    2.690.00
    ^TNX
    3.460.00
    ^TYX

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    2.22+0.010+0.45%
    JS8.SI
    1.165+0.015+1.30%
    U6C.SI
    0.122-0.001-0.81%
    B22.SI
    1.335-0.020-1.48%
    G13.SI
    1.21-0.005-0.41%
    S53.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.17+0.018+11.84%
    5HH.SI
    0.21+0.020+10.53%
    F86.SI
    0.116+0.010+9.43%
    O2I.SI
    0.72+0.050+7.46%
    5DP.SI
    1.315+0.084+6.82%
    O9A.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.141-0.013-8.44%
    5GD.SI
    0.151-0.009-5.63%
    A03.SI
    0.29-0.010-3.33%
    O08.SI
    0.20-0.010-4.76%
    5CH.SI
    0.30-0.015-4.76%
    K29.SI