Lithuania's central bank says no litas repegging before mid-2001

  • 2000-11-30
  • TBT staff and BNS
VILNIUS - On Nov. 20 the Bank of Lithuania reiterated that decisions about the planned repegging of the national currency, the litas, from the U.S. dollar to the euro would not be made until the second half of 2001.

The position was reaffirmed during a meeting between central bank officials and experts from the International Monetary Fund (IMF), who were wrapping up their one-week visit to Vilnius.

Reinoldijus Sarkinas, chairman of the bank's board, told the Baltic News Service after the talks that both the Bank of Lithuania and the IMF were sticking to their positions as to the future of the currency.

"Decisions will be taken in the second half next year. The euro's exchange rate against the U.S. dollar has to stabilize before we can take (decisions) - it's not good when the spread is very wide. We have to find a level favorable for repegging," Sarkinas said.

He said the currency board arrangement, under which the litas had been pegged to the U.S. dollar at a fixed rate of four to one since the spring of 1994, should be maintained at least during the shift of the anchor currency to avoid any shocks. The central bank has repeatedly ruled out a devaluation of the national currency during the repeg.

"I doubt any serious decision will be made prior to the end of 2001," Rimantas Rudzkis, an analyst at Vilniaus Bankas, told The Baltic Times. "The currency (euro) has to be much stronger for such a serious decision to be made. Deciding when to repeg is one of the most difficult decisions to make, even for the very best experts. If we repeg and then the euro goes up this will create a huge problem for Lithuania as we are so dependent on exports. If we repeg and it goes down, it will help us."