Latvia - Money

The Lat replaced the Latvian ruble in March of 1993. The exchange rate of the Lat has remained relatively stable, which has been crucial to Latvia's development process, for it has meant that confidence among foreign investors has remained high. Initially, following independence from the Soviet Union, Latvia experienced considerable economic difficulty as relations with their former Russian trade partner weakened and Latvian goods were not competitive in the western markets. Inflation was high and the purchasing power of the population fell and remained low. With the exception of the setback of 1998, which was tied to the Russian financial crises, Latvia's economic condition has slowly been improving. As of 2000 the purchasing power had increased 4.2 percent from the previous year. The increase in disposable income , at 8.1 percent, has been greater in urban areas than in rural areas, according to the Central Statistical Bureau of Latvia.

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