Changes in the procedure for setting and publishing foreign exchange rates as from 1 January 2014
The procedure for quoting foreign reference exchange rates on the Bank of Latvia website as from 1 January 2014
On its website, the Bank of Latvia will publish the euro foreign exchange reference rates which are both set and published by the European Central Bank. They will be placed on the website on each current day by 16.00 (local Latvia time).
For currencies for which the ECB does not quote the euro foreign exchange reference rates, a link to other sources of information (e.g. Financial Times) will be provided on www.bank.lv.
Currently published data on exchange rates against the lats will be available until 31 December 2013 (including the overview and currency converter), and they will be reported under a special section.
For the convenience of users, a new service is being developed to enable receiving the euro foreign exchange reference rates published by the European Central Bank also in the traditional file formats (XML, CSV, RSS); in addition, a new alternative format, that of JSON, will be offered.
In order to familiarise with the changes in good time, 5 August 2013 is the date on which the Bank of Latvia commences parallel quoting of the ECB's euro foreign exchange reference rates on its website, gradually adding the new XML files so that the information system developers and other interested parties can test their compatibility with their own systems. The XML files will be loaded with the feature to report the date and time as well as the format as parameters.
Drivers behind the changes
At this juncture, the Bank of Latvia sets and quotes the foreign exchange rates of several currencies against the lats on a business day basis. These quotes come into effect as of the next business day and are used in compliance with the procedure stipulated by the legislation of the Republic of Latvia.
Following the adoption of the euro in Latvia, the Bank of Latvia will discontinue setting the official foreign exchange rates, while the ECB's euro foreign exchange reference rates will be also available on the Bank of Latvia website as of 1 January 2014.
It should be noted that, when recalculating (converting) amounts in foreign currencies into amounts in euro, the foreign exchange rates against the euro are quoted in a different manner than the foreign exchange rates against the lats have been quoted so far.
For this reason, in compliance with internationally accepted financial market practice, foreign currency exchange rate against the euro is calculated by using the indirect quotation method, i.e. foreign currency is quoted per unit of domestic currency, which in this case is the euro (for example, EUR 1.0 = USD 1.3317, which means that, in order to obtain an amount in euro, the sum of foreign currency is to be divided by the particular quote). So far, the Bank of Latvia has used the direct quotation method, i.e. setting the exchange rate of home currency, the lats, per unit of foreign currency (for example, LVL 0.702804 = EUR 1.0, which means that, in order to obtain an amount in lats, foreign currency is to be multiplied by the quote).
The List of Monetary Financial Institutions of the Republic of Latvia
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