Little Risk of "Looming" Bulgarian Lev Devaluation - Report

Business | February 22, 2007, Thursday // 00:00| Views: | Comments: 0
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Bulgaria faces little risk for devaluation of the lev because ample foreign exchange reserves and investment help compensate a growing private-sector foreign debt and current account deficit, Nordea Bank AB said on Thursday.

The news came from an article in the Budapest Business Journal, which cites a report of Nordea, issued on Thursday.

Nordea, the biggest Nordic lender by market value, said in a report that speculation of a devaluation of Latvia's currency, the lats, may trigger similar concerns about Bulgaria, which, like Latvia, has a currency board system that involves a fixed exchange rate.

According to the article, a devaluation of Bulgaria's currency, the lev, is unlikely.

Bulgaria's EU membership and low labour costs will continue to attract foreign investment which will spur growth of more than 6%, the report read.

Bulgaria's currency is pegged at the rate of 1.955 lev per euro since July 1997, when it imposed the currency board system to recover from a financial crisis that closed one-third of the country's banks and fuelled inflation to 2,020%.
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