Dollar hits high against litas

  • 2005-11-16
  • From wire reports
VILNIUS - The U.S. dollar hit a two-year high against the litas, the Lithuanian national currency, on Nov. 9, or 2.94 litas, with analysts predicting that the greenback may strengthen further and cast doubt on the country's plans to join the eurozone in 2007.
If the dollar does continue to climb, Lithuania's euro plans could be derailed, local media reported. The stronger the dollar, the faster prices will rise.

In Lithuania, inflation has picked up pace in recent months, though it is still less than 3 percent annually and significantly lower than in Latvia and Estonia.

Raimondas Kuodis, director of the Economics Department at the Bank of Lithuania, said appreciation of the U.S. dollar would inevitably push up prices for oil products, gas, metals and other raw materials.

He estimates that a 10 percent rise in the dollar's value leads to an increase of at least 0.25 percentage points in the general price level in Lithuania.

Other analysts agreed. "The appreciating U.S. dollar is already causing concern," said Rimantas Rudzkis, chief analyst at Nord/LB Lietuva. He noted that prices in Lithuania rose by 0.6 percent in October from September, despite a decline in gasoline prices.

Rudzkis said the only way to curb inflation was to keep state-regulated prices for heating, electricity and public transport in check.