"We were tied to events in America," Kaur Elviste, of Trigon Markets told the Baltic News Service. "Like elsewhere, it was overreaction all the way at the beginning. But then the markets calmed down and investors' self-confidence was restored."
The attacks in the United States made people in Estonia, Latvia and Lithuania rush to change their U.S. dollars. Petrol prices crept up, brokers sweated in response to initial downs, but they relaxed somewhat when they saw gains on the securities markets.
Meanwhile, central bankers and governments came under intense pressure. Lithuania's central bank said it saw no grounds for panic. Its intention of repegging the litas from the U.S. dollar to the euro in February 2002 remained unchanged, Reinoldijus Sarkinas, the bank's chairman told BNS, "There are no grounds at all for an immediate repeg of the national currency from the U.S. dollar to the euro."
Sarkinas's comments came after Kazimiera Prunskiene, a former Lithuanian prime minister and now a member of the Parliament's economics committee, had called for a swift repegging of the litas.
Currently pegged at the rate of $1 to 4 litas, the litas will be repegged to the euro on Feb. 2, 2002. A decision on its value against the euro will be based on the value of the euro to the dollar as announced by the European Central Bank on Feb. 1, 2002.
According to Lithuanian television, over $1 million were exchanged in Lithuania on the day of the attacks. Like their neighbors in Estonia and Latvia, people in Lithuania rushed to change their dollars into euros or other European currencies, mostly German marks. But the selling stopped as abruptly as it began.
"The dollar is Lithuania's anchor currency, so I don't see any sense in changing dollars into litas, as most Lithuanians are doing," Sarkinas told BNS. "The exchange rate of the dollar to the litas will remain stable. We feel no necessity to convene extraordinary meetings of the board or anything like that."
But Estonia's Finance Ministry acknowledged that events in the United States might have an impact. On Sept. 12 it said Estonia might postpone the issue, planned for late October, of government bonds worth 100 million euros ($90.9 million) or 1.56 billion kroons. "The insecurity of the financial markets may lead to increased volatility, wider spreads and a reduction in liquidity, which for Estonia, as the borrower would mean higher overall costs," the ministry said in a press release.
Ulle Mathiesen, head of the Finance Ministry's treasury department, told BNS a decision on the issue had not yet been made, but the chances of postponement had increased.
Preparations for the issue were in their final stages, she said, adding that a final decision will be made in mid-October.
It had been planned that the money raised would be used to reduce financial risks and finance the purchase of long-range radar costing 15.3 million euros or 239.45 million kroons. The postponement would have no impact on Estonia's state budget, said the ministry.
If it goes ahead the issue will be managed by Credit Suisse First Boston, which will market the bonds and issue quotations for them until they mature.
Margarita Starkeviciute, a Lithuanian financial analyst, said she saw no reasons for panicking or speaking about blows to the national economy.
"Lithuania is used to crises. Banks are flush with money, so there won't be any sudden changes," she said. "Moreover, Lithuania's open economy is dependent not only on the West, but also on the East, and the East is growing."
In Latvia, Central Bank President Einars Repse said that future developments would depend on trust in the economic stability of the United States. The lat was not under threat, he said.
Nevertheless, if the U.S. population limited its spending to the purchase of food and other basic needs, this could be the downfall of the U.S. economy and would affect the value of the dollar, Repse added.
The Baltic Times asked leading Estonian analysts, "How will last week's tragedy in New York affect Estonia's economy?" Most of those questioned by Kairi Kurm said the impact would be indirect, via Western Europe, especially through Estonia's main trading partners.
Maris Lauri, analyst at Hansabank Markets:
There will be no direct influence on the Estonian economy. If consumer spending in the United States decreases considerably it will first affect Western Europe and only then reach Estonia.
An increase in the dollar exchange rate might affect our prices. As for fuel prices, it depends on whether the United States takes military action. If nothing happens I predict a slowdown in economic growth until the second quarter of next year.
Rain Lohmus, manager of investment bank LHV Direct:
It will definitely influence our economy. Sluggishness will appear in about six months via Scandinavia's technology sector. This tragedy will also hit us through a decrease in tourism. But I don't believe its influence will be long term.
I would not predict an increase in fuel prices. If the amount of traveling decreases, so will the consumption of fuel. People like to believe in terrible things.
Margus Uudam, deputy secretary of state at the Ministry of Finance:
The impact will be through the Scandinavian market, which is our biggest export partner. Scandinavian economic growth is dependent on the electronics sector, which in turn is influenced by the behavior of U.S. consumers.
It is difficult to predict the much-debated movement of the dollar and fuel prices. There are too many variables which may shape trends.
Toomas Reisenbuk, head of research at Trigon Markets:
The picture is very unclear at this point. The effect on Estonia's economy would be through the global economy and the European market. The Estonian economy depends on what governments and central banks plan to do about monetary and fiscal policies.
Fundamentally, the influence of this tragedy on our economy is negative, especially in its effect on consumer confidence.
Janno Toots, public relations adviser at the Bank of Estonia:
Esto-nia's outlook is heavily influenced by the economic prospects of our major trading partners in Europe, especially Finland and Sweden. GDP growth in these countries has been less than expected in the first half of 2001 and forecasts for 2002 have already been cut.
Estonian export volumes may experience a slowdown - not only in the electronics sector.
The volume of investments from Western Europe is crucial - a decrease in this figure may impact the cost of capital. However, if interest rates in Europe are cut this would have a positive effect in Estonia.