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Tuesday, June 2, 2009

Update on the Potential for Devaluation in Latvia

By Claus Vistesen: Copenhagen

As I pointed out recently in the context of Latvia and the impending potential for a devaluation there is a distinct risk of falling victim to the sin of crying wolf. Yet, as the plot inevitable thickens I am maintaining, as it were, my cry. There are two significant points to think about in the context of what we might call recent developments. First of all there is the news that the 2009 deficit envisaged in the budget before the Latvian parliament will amount to 9.2% of GDP - significantly higher than the original IMF agreed "limit" of 5%, and even well above the latest negotiating objective of the Dombrovskis government of 7%. Of course, this is just number salad but at the end of the day it is important because it determines whether and under what condition the IMF funded bailout packaged continues. The fact that Latvia reports a deficit of this magnitude almost amounts to throwing in towel in my opinion or at least it means that the playing field is now a different one when it comes to IMF funding. Finally, and in case you think that Latvia has not already cut spending just look at the following estimates for cuts in the public sector:

Taking into account that the budget amendments envisage steep spending cuts, the amendments must be passed immediately, so that the ministries and other government agencies know how much money they will be allotted from the budget this year, stressed the Finance Ministry.

It is planned that the Defense Ministry's budget will be reduced LVL 30.8 million, the budget of the Finance Ministry will be cut LVL 14 million, Interior Ministry - LVL 10.4 million, Education and Science Ministry - LVL 22.1 million, Agriculture Ministry - LVL 20.5 million, Transport Ministry - LVL 109.5 million, Welfare Ministry - LVL 7.2 million, Justice Ministry - LVL 7.4 million, Culture Ministry - LVL 15.9 million, Health Ministry - LVL 39.3 million, and Regional Development and Local Governments Ministry - LVL 10.8 million.

The initial demands would of course represent even deeper cuts and this is the main point in this case; just how much pain can you inflict under a fixed exchange rate before the dam breaks? As it appears, everyone has a breaking point and with e.g. property prices slumping 50% y-o-y in Q1 alone it is not difficult to see the boom-bust nature of Latvia's recent economic performance.

Another and very important part of the picture comes from the fact that it is not only the IMF who is footing the bill in Latvia. Consequently and this is the case for all three Baltic economies the expansion has effectively been characterised by the outsourcing of the financial sector to particularly Nordic banks' subsidiaries and most notably Swedish owned banks. This creates a large dilemma in the context of devaluation since most of the of the credit to corporates and households have been provided in Euros as result of the so-called road map towards Euro entry which was perceived as a fait accomplit. Recently, RGE analyst Mary Stokes explicitly tackles this question in the context of the entire CEE edifice. Mary frames the issue neatly when she says:

The general idea is that these parent banks (as well as the CEE economies in which they operate) are likely to be collectively better off if they all continue to support their Eastern European subsidiaries. The problem, however, is they may not be individually incentivized to do so.

Mary is initially positive in the sense that we won't see a large scale withdrawal of foreign banks from Eastern Europe citing recent evidence in the context of Romania, Hungary and Serbia where foreign banks have pledged to support their subsidiaries despite strong economic head-winds. However, she also makes a very important point when she coins the notion of the asymmetric prisoner's dilemma. What lies behind this term is the idea that because different foreign banks are exposed to a different degree in different parts of Eastern Europe with different economic fundamentals the idea of a common commitment across the board may be difficult. One key ingredient here is of course, as Mary notes via Fitch ratings, that the extent to which banks are exposed relative to their parent companies differ substantially. This is simply to say that while some banks are indeed able to shoulder the inevitable losses which will come in a CEE context, some are threatened on their life [1]. Finally, there is the risk that if one bank decide to give up its support for the subsidiary and thus the domestic economic edifice in its current form, so will other banks do the same. On a macroeconomic level this would of course be tantamount to one economy deciding to devalue which would immediately, one would assume, force others to follow suit.

As you can probably tell by now I am getting closer to the topic at hand. Consequently, I believe that what is now materialising with Latvia as the main venue is exactly this asymmetric prisoner's dilemma that Mary is talking about.

Let us begin first with the simple and ominous sign that lending conditions in the Latvian interbank market have become increasingly tight recently. I already pointed to this in my previous post (see link above) where I noted how the Latvian central bank, through its currency board, has already spent over 500 million euros buying lats. Last week in particular was tough as Bloomberg reports how the central bank had to buy 95.4 million lati ($190.6 million) in order to protect the Lati from moving below its trading limit where it is only allowed to move 1% either way against the Euro (from a mid point). According to Bloomberg, such purchases have already caused the foreign exchange reserve to shrink by 38% between September 08 and april 09 alone.

Latvia’s overnight lending rate rose to a record today because of a shortage of lati on the market after central bank purchases of the currency and Treasury bill sales, said Andris Larins, an analyst at Nordea AB. Asking rates on the overnight Rigibor, the interbank lending market, rose to 14.2 percent after the central bank bought 95.4 million lati ($191.5 million) to support the currency last week. Treasury bill sales and higher interest rates on money the central bank charges to borrow also contributed, Larins said.

As can be seen the effect from these operations are very as they have driven the interbank rate to its highest in more than 10 years as the central bank purchases are sucking up liquidity from the market. The main message here is that the shorter term rates are converging to the annual rate (click image for better viewing).

Especially, it is important to pay attention to the fact that the overnight rate has skyrocketed and even surpassed the annual rate. The overnight rate has risen 1352 basis points since the 21st of May and it indicates verly clearly how much stress and uncertainty which is building up in the market. Essentially this is the effect Bear Stearns/Lehmann had on the Libor back in the days where global interbank markets were freezing over. Moreover, I have from reliable sources that some banks are quoting overnight rates as high as 20% which suggests that things are moving fast at the moment.

But why all this fuss now then?

Well, it is worth remembering that it already began last week and as I pointed out above the larger than expected announced budget deficit cast serious doubt over the potential for future IMF funding. However, a more prominent reason is certainly that the Swedish banks and Swedish discourse in general have begun to turn strongly towards devaluation in Latvia as a sure thing. Last week, the Riksbank strengthened its foreign currency reserve with 100 million SEK, but more importantly SEB Chief Executive Annika Falkengren noted how the level of defaults would essentially be the same regardless of whether Latvia devalued or corrected through internal price deflation. This kind of message from a Swedish bank executive is not without importance since it is, for a large part, Sweden that have financed the Baltic expansion through the heavy exposure of many Swedish banks in the Baltic economies. Up until now however, popular belief has held that since most of the loans having been offered by foreign banks were in Euros these banks would strongly reject devaluation as it would effective eat up a large part of their balance sheet in one sweep. However, as many of us have pointed out these defaults would come anyway as a result of the sharp and essentially brutal deflationary correction. It is exactly this recognition which seems to have trickled down to Swedish bank officials.

As a consequence of this and, arguably, a host of other things Bengt Dennis, a former Swedish central bank governor and an adviser to the Latvian government was quoted this weekend of saying that a Latvian devaluation is a done deal. The only question would be when and how.

Bengt Dennis, the former Swedish central bank governor and an adviser to the Latvian government on how to cope with the economic crisis, said the Baltic country will need to devalue its currency. “No one knows if there will be a devaluation tomorrow or in a few months -- the timeframe is always uncertain -- but we have moved beyond the question of whether there will be a devaluation and should instead focus on how it will be carried out,” Dennis told Swedish state television SVT last night.

This is of course pretty uequivocal and indicates quite strongly how the end game is near. In essence, it is very obvious I think that the sentiment in Sweden has turned from one in which the desire to wait out the storm and take the losses gradually to one where there is a demand for closure and immediate quantification of the losses. This is significant since the longer markets believe that Swedish banks no longer explicity support the peg, the closer we move towards a devaluation.

Clear signs of such sentiment comes from the publication of the Riksbank's Financial Stability Report out today where it is estimated how Swedish banks will lose as much as SEK 170 billion during 2009 and 2010 on loan losses. Now, it is impossible to say whether these estimates implicitly include a Latvian devaluation or not, but one thing is certain; the estimates have the Baltics written all over them and, if anything, the downside looms as a direct function of the potentially worsening situation in the Baltics. Add to this that the Swedish economy in general have endured an absolutely horrendous 6 months across Q4-08 and Q1-09 and it is not difficult to see from where the impetus to pull the plug in the Baltics could come from. Recent figures for GDP indicate how national output fell 6.5% over the year in Q1-09 which compares to an annual drop of 4.9% in Q4-08.

To add to the pressure it also appears that the political tensions in Latvia is growing.

In the first instance there is of course the expected and almost obligatory refutation of the Dennis' comments about the almost certainty of a devaluation.

I hereby announce that an opinion by Bengt Dennis, member of the High Level Advisors Working Group to the Government of Latvia, which he expressed today to the Bloomberg news agency about an inevitable devaluation of the Latvian national currency – lats – is not true, and should be evaluated as expert’s personal, individual opinion which has nothing to do with issues concerned in the first sitting of the High Level Working Group, as well as with the position of the Government of Latvia on overcoming the economic crisis.

This is of course all well and good, but the question is whether we can take this for granted as the "official" position. For starters, Bloomberg (linked above) quotes Justice minister Mareks Seglins for calling a debate about the potential gains and losses relative to a currency devaluation. This would indeed be something new in a Latvian context as a debate about the Lati's Euro peg hitherto has been stifled completely by the official backing of the Lati's value against the Euro. As people closer to the Baltic situation than me have pointed out, this may a specific attempt to stir up things by Seglins since his party are bound to lose local elections come Saturday and may thus lose the majority in parliament.

A Done Deal Then?

Not quite, but it is impossible not to notice that some significant cracks have emerged. I think it is particularly important that Swedish stakeholders in the Baltic debacle now seem to favor "throwing in the towel" through a devaluation as it is assumed that it would amount to same thing, in the end, as trying to keep things together. Of course, no one other than Latvia herself can choose to devalue but the signs from Sweden are very important in the sense that the Swedish banks are paramount in keeping the economic edifice together. Moreover, there is the IMF where we do not yet know whether bailout funding will continue with the new estimate of 2009 budget deficit. My guess is that the IMF won't stand for it but then again, it would be wise to cut some slack if they have an interest in keeping the peg (which I am not it really wants).

I will end as I did last time with a general warning. At this point rumours will drive the discourse as much as real economic fundamentals and political decions. However, it is difficult to deny that a devaluation in Latvia seems to be moving closer.


[1] - Incidentally and for all the complaints about me focusing too much on the similarities between the CEE here is an example of differences. This is to say that when it comes to a high degree of event risk there are of course notable assymmetries. What I would like however to point out is that when it comes to the fundamentals and the underlying problems/courses of the crisis the Eastern European countries are, in many cases, strikingly similar.


Unknown said...

Mr Bengt Dennis was chief of the Riksbank when Sweden let the Krona float and still does so he should know to read the signs of what is coming.
Back then in 1992 there was also total denial from the establishment of a devaluation and 500% interest rate for a couple of days but it did not work then as it will not work this time either.
As I have understood it, the over valuation of the LAT is about at least 40%. To correct that via internal depreciation of salaries and reduction of prices, I just cannot see how any politician can execute that task in a democracy in Europe.

Anonymous said...

Poor old guy B.D. trying to justify himself for what he was unable to handle back in 1992.
This all discussion is done and closed nothing new or substantial here...

P.S. "Good luck" with your bets guys (keep on losing like ever since 2005). Hopefully, you get at least a fixed fee for this ;)

Anonymous said...

We can agree that devaluation is near. OK. But what is the point of it? I do not see any benefits for economy from devaluation. Just deeper crisis.
Or the devaluation will happen because Central Bank will not be able to maintain fixed peg, it will run out of foreign reserves?

Anonymous said...

Could anyone recommend to people inside the country? Some provisions on what will happen and what to do in case of devaluation...

Edward Hugh said...


"I do not see any benefits for economy from devaluation."

Well in my view they are many and clear, but the argument is to extensive to run here, so I will put a list of relevant posts at the top of the right sidebar and you can read through them.

"Or the devaluation will happen because Central Bank will not be able to maintain fixed peg, it will run out of foreign reserves?"

Well, not necessarily, since the EU, the IMF and the Swedish is government could keep offering loans to top them up again.

But the Swedes have just given up, that is what is new here.

But the main problem as a peg exhausts itself is not the forex reserves as such, but liquidity in the local currency, in this case the Lat. If people convert to euros just as soon as the central bank prints Lat, then the real economy cannot work, it chokes for lack of the necessary monetary mass. That is what has been happening. The more people expect devaluation to happen the more it has to happen, that is why economists call these processes self-fulfilling. All boringly obvious when you have watched this sort of thing time and again.

It is a pity people have to suffer so much just for a simple lack of understanding of basic monetary theory.

As it is, and as Claus points out, Lat liquidity is now so scarce you are having to pay 20% (annual rate) just to borrow money overnight interbank in Riga right now, and with interest rates so high, and budget cuts from the government everywhere there is absolutely no chance for recovery.

This has become a total dead end. There was once a film with an appropriate title: "They Shoot Horses Don't They". In Latvia it is only the police dogs who get to be put out of their misery: they werer put to sleep as part of an earlier round of cuts.

Oh, and it isn't only the central bank that gets to run out of reserves, the country will also run out of bright young people, as more and more of them are also forced to leave.

Mary said...

I basically agree with everything you wrote. I would go so far as to say (which is pretty much what you seemed to be saying) and that is, that the game is up and a devaluation looks inevitable. It's just a question of when and how much of a ripple effect it will have. As you pointed out, the fact that anyone even connected with a Swedish bank is discussing the idea of devaluation openly means that they're looking to get it over and done with.

I do, however, stick with the argument I made in December and again recently in May (see link below). Whether Latvia devalues or doesn't devalue (and it looks like it will certainly devalue), I'm concerned about the contagion effects.

Contrary to what many commentators might soon claim, I think that while postponing devaluation was certainly painful, hopefully it bought officials time to come up with contingency plans to prevent a domino effect beyond the Baltics. For example, I see the fact that Poland recently reached a deal with the IMF for a flexible credit line as a very positive sign, which will further insulate that economy from potential contagion.

With a Latvia devaluation, I'm pretty convinced that Estonia and Lithuania will follow behind. However, the big question in my mind is how such a devaluation will affect the rest of the CEE. I found it interesting that Bloomberg was attributing a weakening in Central Europe currencies yesterday to mere talk of a Latvian devaluation. In my mind, that doesn't bode well for a CEE decoupling from problems in the Baltics.

I'd be interested in your takes on whether you see a CEE 'decoupling' from Latvia and if not, how badly/immediately you think the rest of the region could get hit.

See my Latvia: Will It Start A Dangerous Domino Effect?

All the best!

Daniels said...

There are many stories about just how much cuts have been made - estimates vary from 50 million (central bank estimates) to 500 million (government claim). Part may be due to the appalling accounting system we have here, confused by the difference between commitment appropriations and payments (The IMF commented on this). Part may also be due to a spending frenzy in December 2008.

Some things are sure:

1) The cuts are not as much as the government claims;

2) the cuts are not enough.

3) GDP will be even worse then foreseen.

Edward Hugh said...

LONDON, June 3 (Reuters) - Latvia's Treasury failed on Wednesday to sell any of the 50 million lats $100.7 million) of various Treasury bills offered for sale. The failure to attract offers for the paper is exacerbating fears for the lat currency which many analysts fear is headed for a devaluation.

GYULA TOTH, EMERGING EUROPE ECONOMIST AT UNICREDIT IN VIENNA "Latvia has failed to sell any of the four series of debt offered at today's auction and increases further focus on devaluation risk, following recent high level devaluation comments and FX reserves losses. The auction failure follows a significant further increase in Overnight money market rates, against the backdrop of Bank of Latvia reserves losses. Against the backdrop of a potentially near double digit fiscal deficit in 2009 clearly this failure goes to the heart of Latvia's vulnerabilities and starts to more meaningfully diminish the govt's ability to hold out." AGATA URBANSKA "If the IMF tranche does not come in soon then the story changes for Latvia, leaving them in a much worse position in terms of defending the peg."

BEAT SIEGENTHALER, CHIEF STRATEGIST, EMERGING MARKETS: "Market pressures are building on Latvia. The central bank has been selling euros to support the lat and its reserves are shrinking. Their intervention has pushed up interest rates. Nobody wants to hold the lat for a prolonged period of time and liquidity has dried up. This is an unstable situation. There has to be some outside help either in the form of the ECB or IMF or there will be a devaluation. Another alternative is to introduce capital controls."

j said...

Latest news :
Latvia failed Wednesday to sell any debt securities at a local debt auction. The Treasury had offered to sell 20 million lats ($40 million) worth of paper maturing in July, as well as 10 million lats maturing in
September, 10 million due to mature in December and 10 million maturing in June next year.
As far as I know during next three months the treasury during has to re-finance local debt worth 274 mln LVL. Overnight rates (bid) today reached 24% in local markets.

Edward Hugh said...

Hi Mary,

"I'm concerned about the contagion effects."

Me too. Basically the pressure will hit the rest of the Baltics first and then Bulgaria. But Hungary will definitely take a hit from the shock.

Portfolio Hungary this afternoon:

"Hungary's forint has started to ease against the euro in tandem with its regional peers at around 14:00 CET on Wednesday, as regional risks have increased and global investor sentiment has worsened. The HUF eased to 288 to the EUR, the weakest level in a week, while it was as strong as 279 in the morning session. Poland's zloty and the Czech koruna are also under pressure, but the depreciation of the forint (cc. 3% intraday) is by far the biggest."

Edward Hugh said...


"Could anyone recommend to people inside the country? Some provisions on what will happen and what to do in case of devaluation..."

Well, I don't suppose it means much, but you do have my heartfelt sympathy. What to do? There isn't much you can do as an individual really. Except for the obvious things, and be prudent.

I wish I could be more positive. I can't. It is a very difficult situation, and there's no point now in dwelling on the fact that it would have been better never to have gotten here.

Gnudiff said...

Well, now that there have already been 15-40% salary cuts in the public sector (actual salaries are lower than official cuts, since many government institutions beg their workers to take unpaid leave on regular basis, equal to 10-30% more salary cut effectively. At the same time some, such as the Internal Revenue Service are moving to a 4-day work week).

In this situation a devaluation on top of all this would effectively double the salary cut, wouldn't it? So we'd be speaking actual 70-90% lowering of salary compared to, say, Jan 2008?

I don't see how this can be better for the economy even compared to what is already happening now. At least the purchasing power of the population would go even further down the drain, considering that prices have not really much fallen since January.

Having a devaluation NOW to me really seems the worst of the both worlds for the ordinary citizen. If this would help economy though, it could at least be understandable.

Edward Hugh said...

Hi Gnudiff,

"Well, now that there have already been 15-40% salary cuts in the public sector (actual salaries are lower than official cuts, since many government institutions beg their workers to take unpaid leave on regular basis, equal to 10-30% more salary cut effectively."

Well look, we need to differentiate between two things here. Cuts in living standards and cuts in unit labour costs. From an economic point of view it is the latter not the former we want.

The reduction in unit labour costs involves a fall in both wages and prices to the same extent. This should be nearly, but not quite, living standard neutral. This is why it is called "internal devaluation".

Quite what the advantage of internal vs external devluation is has never been clear to me, since it is so devilishly complicated to achieve. Perhaps it was based on the foolish and vain hope that it would never actually take place.

Anyway, what matters here are hourly rates, not monthly take home pay. The latter is much more influenced by the recession than by the wage and price correction. Evidently, if you follow a path which produces an annual rate of contraction of 18% there is pain, since people are working less and less. But this is not a result of the price correction, it is a result of the price correction being too slow, and the global environment being hostile.

You now need to live from exports, and when your relative prices are cheap enough you will start to grow again, by selling to customers abroad, since your domestic market is going to be without life for years (at least).

"Having a devaluation NOW to me really seems the worst of the both worlds for the ordinary citizen."

Well, really you seem to have little choice at this point. The IMF may agree another tranche next week, and you may stagger on till the autumn, but I honestly can't see any of this working. But then I never could.

Edward Hugh said...

I know some people don't like them, but here (below) is the Danske Bank Emerging Markets briefing for today.

They rightly draw attention to the silence from both the IMF and Sweden. There is obviously a lot of discussion going on behind closed doors at the moment.

Danske are also absolutely right to focus on contagion. The whole issue now coincides with growing concern at the level of global equities that the recovery in 2010 may not be as straightforward as it seemed at month or so ago. Bernanke has urged a reduction in the US fiscal deficit, which means little GDP growth (if any) can be expected in the US next year. This is very bad news for Germany and Japan, and (indirectly) Russia.

Russian stocks reacted sharply yesterday, while Czech Prime Minister Jan Fischer said it may be “ very difficult” for the economy to return to growth next year as projected by the Finance Ministry and the central bank.

So hold on tight everyone, coz here we go.


Baltic worries have clearly moved to the top of the agenda in EMEA markets with devaluation fears escalating rapidly during the past week. Concerns regarding a devaluation of the Latvian lat increased further yesterday after Latvian Prime Minister Dombrovskis in comments to local media ruled out a devaluation of the lat while going on to say that if a devaluation were to occur it would be of the order of 30% rather than 10-15%. Devaluation concerns rose again when a government bond auction attracted no bids.
In an interview with CNBC Mr. Dombroskis said yesterday night that Latvia needed to reach an agreement with the IMF and EU quickly and that “fears of a domino effect in [the] region to a certain extent [are] justified”. Mr. Dombroskis also said he expected an announcement on progress with the IMF at the beginning or middle of next week.

With little macroeconomic data scheduled for release in the region today, markets are likely to continue to focus on the Latvian situation. We would focus especially on any hints by the country’s officials regarding a possible devaluation, and on news from Stockholm concerning whether the Swedish government and central bank comment on the situation in Latvia. Further, any news from the IMF, currently visiting in Riga, is likely to be very important for CEE markets. We think it worrying that neither the Swedish government nor the IMF have made any serious attempts to allay market concerns regarding a possible devaluation in Latvia.
 Today is an historic anniversary in Poland marking the 20th anniversary of the country’s first free elections. (See our overview of the past 20 years in Poland including its freedom and economic transition here).

Increasing concerns regarding a possible devaluation in Latvia yesterday spilled over into other countries in CEE. Although the direct link between the Baltic markets and others such as Poland, Hungary and Romania is very limited it is only natural that concerns over the situation in Baltic States triggers renewed concerns regarding the position in Central and Eastern Europe where many countries to a greater or lesser extent face problems similar to those in the Baltics. Those most at risk from negative spill-over effects are Latvia’s neighbours Estonia and Lithuania although we would expect contagion to affect countries in the region most like Latvia in terms of macroeconomic imbalances such as Romania and Bulgaria.

Given significantly increased event risk in the CEE we generally recommend exercising considerable caution in all CEE markets and would expect both negative and positive news from Latvia to drive all CEE fixed income and FX markets in the coming days. In other words, don’t be surprised if further bad news from Latvia weakens the forint, leu and zloty yet further.

Unknown said...

Today,4 june, overnight lending rate is 25% in Latvia.

Unknown said...

According to E24 in Sweden an agrement between Latvia and the IMF is ready.

Daniels said...

You are right to point out that many of the schemes used by the government (4 day weeks, vacation) almost certainly do not improve productivity, and are certainly not the long term solutions proposed and agreed with the IMF! I think that they wait until the election weekend is over, although that will not change the Saiema - unless there is an early election or their owners stop making payments.

Unknown said...

Lars Christensen, chief analyst at Danske Bank says today "The current interest levels are unsustainable" and "Since Commission nor IMF have done any statment to calm the market devaluation is coming"

Unknown said...

According to Svenska Dagbladet today, http://www.svd.se/naringsliv/varlden/artikel_3013799.svd , Latvia's currency reserve will last maximum another 90 days without an agreement with the international lenders of more money to Latvia.

The thing that I worry most about for Latvia is "Where are the money coming from in the future to repay all the loans?" How much reduction in public spending can people accept before the riots starts again?
Can anyone give me some suggestions of what type of export industry in Latvia that can create enough wealth to Latvian in the future.
I can only see wood and tourist industry that really can add substantially to growth for Latvia and both are dependant on a devaluation to restore competitiveness.

j said...

I think situation is not that bleak - Latvia has very good geographical location, labor force is (relatively) skilled and there are several industries with potential (ie ports/transit, forest industry, tourism, pharma, IT). Latvia just needs to solve current crisis, to improve relations with Russia and to get rid of oligarch's/politician's influence on business.

j said...

And, of course, it needs competitive exchange rate and also some internal deflation (ie lower wages).

Latvian abroad said...


IT would be a possibility. Latvia is already doing a substantial amount of IT outsourcing for foreign customers.

GD said...


I put some money in bank at really good rates. Now I cant touch it till the 20th of June.

Is there any chance that by that time lat will be devalued?
I was looking forward to invest in the UK, but in case lat devalues I will get about 30-40 % less, which is quite sad.


Unknown said...

Interesting article in Svenska Dagbladet about the Latvian crisis.