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Lithuania c.bank calls for calm, quiet on currency

Published 03/09/2009, 06:27 AM
Updated 03/09/2009, 06:32 AM

VILNIUS, March 9 (Reuters) - Lithuania's central bank governor repeated on Monday there was no danger of a devaluation of the litas currency and urged people to stop discussing the issue after a rush at the weekend to buy foreign currency.

Newspaper Lietuvos rytas reported on Sunday that ordinary Lithuanians had been rushing to swap litas into euros, dollars and British pounds. A central bank spokesman told Reuters on Sunday there was no cause to worry .

"We have made a commitment to keep the litas rate unchanged until the eventual adoption of euro, and we will stick to it," Governor Reinoldijus Sarkinas told state radio on Monday.

The litas has been pegged to the euro since 2002 at 3.4528 litas. He said he regretted that people had heeded rumours, which followed remarks by a senior lawmaker last week.

Lithuania slid into recession in the fourth quarter and neighbouring Latvia has already reached out for aid from the International Monetary Fund, reflecting a collapse the economies of the EU's once-booming Baltic states.

Sarkinas said devaluation should be dropped from public debate. "The less everyone talks about it, the better," he said.

The speaker of parliament made a similar call.

"I call upon others and pledge ... to keep away from making scary comments and expressing loose opinions in public, especially when they have no sound grounds," speaker Arunas Valinskas said in a statement.

He said the secret service should look into who started spreading rumours about a devaluation. Leading national dailies carried front page reports on Monday of widespread selling of the litas, with people in the street saying they were worried it was about to be devalued.

Local media have also pointed to remarks made by Kestutis Glaveckas, the head of parliament's finance and budget committee last week as one source of concern around the currency.

He told a news conference on Thursday that the litas was strongly overvalued, and that its rate relative to the euro could be changed when Lithuania eventually adopts the euro.

Glaveckas told Lietuvos rytas he regretted the remarks and said on Monday there were no reasons for a devaluation.

Prime Minister Andrius Kubilius also told his party's meeting on Saturday that all talk of a devaluation were "complete nonsense". "The litas was and is to remain stable. Full stop." he told the party members.

Lithuania failed to adopt euro in 2007, and now targets 2012 for the euro zone entry. (Reporting by Nerijus Adomaitis; editing by Patrick Graham)

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