What will the next country to get euro?

[Guest]

.......will be Estonia. Their Kroon has been fixed to the euro at 1 € = 15.6466 EEK since at least January 1999. See:

http://www.ecb.int/stats/eurofxref/

I wouldn't doubt it if they start soon after 2004-05-01

[Olivier]

.......will be Estonia. Their Kroon has been fixed to the euro at 1 € = 15.6466 EEK since at least January 1999. See:

http://www.ecb.int/stats/eurofxref/

I wouldn't doubt it if they start soon after 2004-05-01

Thank you for the link!
The litas from Lithuania is linked too! The Pound of Cyprus too!

[invisible]

.......will be Estonia. Their Kroon has been fixed to the euro at 1 € = 15.6466 EEK since at least January 1999. See:

http://www.ecb.int/stats/eurofxref/

I wouldn't doubt it if they start soon after 2004-05-01

Thank you for the link!
The litas from Lithuania is linked too! The Pound of Cyprus too!

I don't think so.
Comparing the charts you see that the LTL and CYP value is changing.
EEK stays at a constant rate.

[esperantisto]

The Lithuanian Litas is fixed as of february last year.

[John S]

The Lithuanian Litas is fixed as of february last year.

http://www.ecb.de/stats/eurofxref/

The lita seems to be fixed to the euro in the first 2 digits to the right of the decimal point. That is 1 € = 3.45xx LTL. The last 2 digits do vary. Thus the lita is not entirely fixed to the euro.

[esperantisto]

As you can see from http://www.lb.lt/home/default.asp?lang=e
The Litas is fixed by law at:
Code Rate Change %
EUR 3.4528 0.0000

There may be banks that don't do a fair exchange. The link gives reference rates which are averages of what major banks charge.

[John S]

As you can see from http://www.lb.lt/home/default.asp?lang=e
The Litas is fixed by law at:
Code Rate Change %
EUR 3.4528 0.0000

There may be banks that don't do a fair exchange. The link gives reference rates which are averages of what major banks charge.

I didn't see anything about the rate being fixed by law. A change of 0 % means its value did not change from the previous day.

The lita seems to be holding, since 2003-09-26 at 3.4524 LTL/€. The Kroon is fixed at 15.6466 EEK/€ and has been since 1999.

Anyway, both would be candidates for quick euroisation. And I'm sure that is what both have in mind.

[avij]

I'm not sure if they have any specific contracts for their exchange rate, but they sure seem to keep their currency at a defined exchange rate. I found this image from here.

[esperantisto]

From the english FAQ at the Bank of Lithuania:

Litas Peg to the Euro

When was the litas pegged to the euro?

The litas was pegged to the euro on 2 February 2002 at a fixed exchange rate (3,4528 litas per 1 Euro).

Will the litas remain the national currency after pegging it to the euro?

Yes. After the litas was pegged to the euro, it remains the national currency.

How was the official exchange rate of the litas against the euro established?

The official fixed exchange rate of the litas against the euro, effective as of 2 February 2002, was set as follows: the US dollar and euro market exchange rate as announced by the European Central Bank on 1 February 2002 was multiplied by 4.
The US dollar and euro exchange rate is announced by the European Central Bank with four digits following the decimal point; therefore, the official litas exchange rate against the euro also has four digits following the decimal point.

Why should the litas be pegged to the euro?

The Lithuanian economy is becoming continuously more and more integrated with the economies of the European Union Member States and candidate countries. With the development of the relevant foreign trade and investment structure, it is becoming more important to reduce the movements of the litas exchange rate against the currencies of the main trading partners. In the context of economic and political integration, the peg of the litas to the euro is a logical step in promoting further co-operation with the European Union. The system of the litas peg to the euro will make it possible to join the Economic and Monetary Union and adopt the euro in the future.

Will the litas remain stable after pegging it to the euro?

Yes. The fact that the litas was pegged to the US dollar in 1994 allowed to ensure its stability against the US dollar. The litas has been pegged to the euro at a fixed exchange rate as well, and will be stable in relation to the euro.

Do Lithuanian commercial banks exchange the litas into the euro and at what exchange rate?

Since 2 February 2002 litas exchange into the euro and vice versa has been done on the basis of the official exchange rate of the litas against the euro (3.4528 litas for 1 euro) set by the Bank of Lithuania without any restrictions, with commercial bank charges limited by the Bank of Lithuania for cash (1 per cent of the exchanged amount) and non-cash (0.25 per cent) foreign exchange operations. The litas is exchanged into the US dollar and other foreign currencies at the market exchange rate.

[Olivier]

Litas Peg to the Euro

They probably will get the euro before the United Kingdom...

[John S]

I'm not sure if they have any specific contracts for their exchange rate, but they sure seem to keep their currency at a defined exchange rate. I found this image from here.

Despite what the Bank of Lithuania says, the European Central Bank says differently. If you look at their website, you will see as I reported earlier that the lita flutuates in the third and fourth decimal place.

Look at the daily closings displayed on the calendar. You will see that since 2003-09-26, the lita has remained constant relative to the euro at 3.4524.

Please note that pegged to the euro does not mean fixed to the euro. Pegged means the currency follows the euro but it does allow for some minor fluctuations. If the litas were perfectly constant with the euro, then its value would be fixed.

If you feel strongly that lita should be fixed to the euro then it is up to you to contact the ECB and inform them that their web page is showing variations to the lita when it should be fixed to the euro at 3.4528. It is between the ECB and the Lithuanian National Bank to determine which rate should apply.

http://www.ecb.de/stats/eurofxref/

[avij]

Please note that pegged to the euro does not mean fixed to the euro. Pegged means the currency follows the euro but it does allow for some minor fluctuations.

Yes, I know that. Perhaps I was a bit unclear, but what I really meant with my observation is that the Lithuatians have clearly done something in early 2002 to stop the major fluctuations so that they'd be able to enter ERM II, one of the requirements for Euro currency adopters. I never meant to claim that their rate was fixed, but that they're keeping the rate as constant as possible.

Craft presented a link to an informative document at Danmarks Nationalbank which states that "The member state's currency must for at least 2 years have observed the normal fluctuation bands in ERM II without devaluation." On the ERM II page it is stated that "The standard width of the fluctuation band in ERM II is +/- 15 per cent."

So, if the central rate of LTL/EUR is 3.4524, the lita could float anywhere between 2.94 and 3.97 and it'd still be within the limits of ERM II. And as has been observed, their currency fluctuates much less than that so they're safe in this regard. In fact, it looks like they could squeeze their allowed fluctuation limits even tighter without problems. For example Denmark has agreed on a narrower band, they have +- 2.25%. The 2.25% figures for LTL would be 3.38 and 3.53, and I don't see they'd be having problems keeping their currency even within those limits. For the last year the rate has been between 3.4517 and 3.4537, ie. less than 0.1% difference to the central ratio.

[esperantisto]

I stand by my above statements. In lithuania, the litas is legally an exact fraction of the euro, but banks charge fees, causing bank-averaging numbers to not be fixed.

[John S]

I stand by my above statements. In lithuania, the litas is legally an exact fraction of the euro, but banks charge fees, causing bank-averaging numbers to not be fixed.

Those fees do not appear as part of the value of the lita on the ECB site. Those fees are added by the bank and vary from bank to bank.

[John S]

Craft presented a link to an informative document at Danmarks Nationalbank which states that "The member state's currency must for at least 2 years have observed the normal fluctuation bands in ERM II without devaluation." On the ERM II page it is stated that "The standard width of the fluctuation band in ERM II is +/- 15 per cent."

I wonder how many of the 10 candidate countries variations fall presently within the ±15 %. I also wonder if a candidates country's currency meets the 2 year requirement before 2004-05-01 if that country will be able to use the euro before 2006-05-01.

Since, for example, Estonia's currency has been fixed and stable since 1999, obviously more then 2 years, could they technically switch to euro usage immediately after 2004-05-01 or must they wait until 2006?