Will Latvian Pain Hit the Krona?

Latvia is under severe pressure, to say the least. Take a look at the GDP % change year over year:

The chart shows an 18+% decline in GDP yoy! Ouch!

Latvia is taking on much of this pain precisely because it chooses not to devalue its currency, which is pegged to the rising euro. The Prime Minister of Latvia has been firm in his commitment, but yesterday he made clear his commitment is splintering a bit and could have an impact on lenders to Latvia—which primarily make up Swedish banks.