Published: 04.04.2015 Updated: 30.01.2023


2002/2 Financial Market in Latvia ( 1,36 MB)
Jelena Zubkova, Egils Kauzens, Ivars Tillers, Martins Prusis

During the last decade Latvia made a considerable progress and has created an institutional structure and legislative framework to support a market-oriented financial system. The financial sector of Latvia comprises nearly all financial institutions typical of developed markets. The regulatory enactments of Latvia conform to all EU requirements and in some respects are even stricter. Latvia's accession to the EU will be an important turning point for the country's economy, including the financial market, and will provide higher income and wider opportunities.

Key words: financial market, settlement systems, European integration

JEL classification codes: G10, G20
2002/1 Real Exchange Rate in Latvia (1994-2001) ( 967 KB)
Martins Bitans

The analysis of the exchange rate in Latvia presented in this publication covers a period from 1994 until 2001. The analysis has been based on two commonly used methods: the single equation approach and the macroeconomic balance approach. The existing fundamental variables in the economy warrant the exchange rate that is undervalued relative to its equilibrium. Therefore, the current exchange rate in Latvia generally corresponds to the current stage of economic development. The real appreciation of the exchange rate with respect to the countries of Western Europe is in line with the appreciation of the trend exchange rate, which is driven mainly by rising productivity in the tradable sector. Therefore, the appreciation of the real exchange rate from 1994 until 2001 has not generally harmed foreign trade. As long as real appreciation is supported by underlying fundamental variables in the economy, it does no endanger macroeconomic stability and growth.

Key words: real exchange rate, foreign trade

JEL classification codes: C20, E20, E52, F10