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Euro Increases Economic Confidence Towards Latvia, Say Estonian Experts

Confidence towards investing and doing business with Latvia has grown thanks to the country's switching to the euro yesterday, say Estonian experts, as the threats of devaluation or a liquidity crisis are now history.

Tõnu Palm, the head economist at Nordea bank, told ETV on Wednesday that the expansion of the Eurozone makes life more convenient for ordinary Estonians, although Latvia's changeover is likely to have the biggest impact on those whose businesses share ties with the southern neighbor.

Bank of Estonia President Ardo Hansson said that Latvia is a worthy Eurozone member, having practiced responsible fiscal policy in recent years.

Hansson said that the effect on Estonia will be felt in the long run, adding that Estonian businesses will be more willing to invest in Latvia, and vice-versa. Integration in border-areas will also receive a boost, he said.

Latvia switched to the euro on the early morning of January 1, with Prime Minister Valdis Dombrovskis saying that it will help speed the nation's convergence with the average quality of life in Europe and Scandinavia.

The Bank of Estonia is exchanging Latvia's old currency, the lats, at the rate of 1 lats for 1.42 euros, without a commission until the end of February. Those holding bank accounts in lats have already had their money converted automatically.

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