Holding To Our Devaluation Call

Key Latvian financial market indicators have deteriorated significantly since June 2 with the benchmark 5-year CDS spread rising by 65bps in two days (to trade at 675bps) while interbank rates simultaneously spiralled to record highs. The overnight RIGIBOR rate jumped to 16.4% on June 3 on the back of a statement by Bengt Dennis, a senior government advisor, wherein he expressed that a devaluation of the lat was effectively inevitable. This followed comments by Latvian Justice Minister Mareks Seglins on June 1 where he stated that the government should debate the prospects of a

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