The Latvian currency the Lat has been a symbol of independence in this proud nation since the days of the First Republic and well into recent history when Latvia regained its independence.
The Euro is almost upon us! The good old Latvian currency of the Lat (LVL) is set to be phased out and replaced on the 1st of January with the Euro. What does this mean for Latvia and why are they switching currencies?
Well in theory the Lat and the Euro have been pegged for some time and as a measure to ensure that the Lat did not undergo devaluation the pegging of the Euro was seen as a way to ensure stability. Many people within the general public first objected to the idea of replacing the Lat with the Euro but since the early vocal opposition in the nation has been relatively quiet.
How will this effect day to day life in Latvia? There should be measures in place to stop a rise in teh cost of living and for some time housing prices have been set in Euros to protect mortgage holders. The reality however is that as with many nations ‘Rounding up’ is most likely inevitable. Since October 2013 it has been law to display both LVL and EURO on prices leading to some rather interesting pricing. For example 0.99 LVL / 1.41 Euro. Now can you foresee a future where what was once 0.99 LVL will remain 1.41 EURO or will it simply be rounded to 1.50 EURO? Lets see. I personally feel that as prices have in the past years since the economic crisis been held down that a rise is inevitable.
Interestingly, Latvia’s currency has been switched in the last hundred or so years many times. Since the end of the First World war a number of temporary currencies came in to place before 1922 when the Latvian bank established the Lat as a national currency. During the Second World War Soviet and Nazi currencies entered before the Soviet occupation left the country without a national currency until the 1990’s. Another temporary currency filled in the gap until the Lat was restored with its signature 1 Lat coin and emblem the Latvian state on one side and a Salmon on the other!
This is a living testimony to the history of Latvia during the past century and how the influence on the nation has switched so many times. Let us see how long will the Euro stay in place?