Euro Lower as Latvia Joins the Currency Union

It’s a brand new year, and a new country has joined the eurozone. At midnight local time, Latvia became the 18th country to join the eurozone. The euro is down to start the New Year, with concerns about the eurozone overall, and significant opposition to using the euro in Latvia itself.

There is actually a great deal of resentment toward the switch to the euro in Latvia. Opponents of using the euro are greater in number than those who want the switch. Many Latvians worry that prices will rise, and many don’t want to be saddled with other countries’ debts — especially with some of the euro zone economies still struggling a great deal.
In order to qualify for membership in the currency union, Latvia’s former Prime Minister, Valdis Dombrovskis, forced through austerity measures and pegged the currency to the euro. He’s currently acting as a caretaker, since he resigned in November.
Euro is lower to start out the new year as forex traders consider the situation in the euro zone. Concerns about the slow pace of recovery, along with comparisons to other economies, like the United States and United Kingdom, could mean struggles for the euro.
At 15:43 GMT EUR/USD is down to 1.3747 from the last open at 1.3758. GBP/USD is down to 1.6546 from the last open at 1.6561.

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