Estonia currency panic
by Guardian Unlimited
A rush among some of Estonia's Russian-speakers to sell local currency due to rumours of a devaluation died down on Tuesday and the head of the central bank again emphasised the stability of the exchange rate.
Many currency exchange booths ran out of foreign currency on Monday after some Russian-speaking residents rushed to convert their kroons after a rumour spread on Russian-language websites that the government would devalue the currency.
Calm had returned by Tuesday.
"Today is a normal day and we have not run out of currency. We ran out yesterday and the day before," said Marja Liisa Poldre, a cashier at the Tavid exchange booth in a shopping centre near the capital, Tallinn.
"No one explained why they wanted to sell kroons, but we think it had something to do with the news. Clients wanted to buy whatever currency we had," she told Reuters.
The initial source of the devaluation rumour was not clear, though it appeared mainly on Russian-language websites.
Around a third of Estonia's 1.3 million population are Russian-speakers, with many not able to speak Estonian.
The head of Estonia's central bank reiterated on Tuesday that there was no reason to change the currency peg of 15.6466 kroons to the euro. The country runs a currency board system which backs every issued kroon with reserves.
To change the exchange rate requires the passing of two readings of a bill in parliament.
"The panic did not have any basis," central bank governor Andres Lipstok said on national public TV, adding that the concern had been artificially created.
Estonian Prime Minister Andrus Ansip, who was visiting Slovenia, said devaluation rumours were groundless.
"They are just rumours and quite stupid rumours ... don't pay any attention to those rumours," Ansip told a news conference in the Slovenian capital.
"I cannot see any entrepreneurs or sectors who would have some benefits from devaluation," he added.
Lipstok said the selling pressure had not created any pressure on the monetary system.
A similar devaluation rumour was spread by mobile phone messages in neighbour Latvia last spring which also sparked selling at currency booths in the capital Riga and forced the central bank to support the lat to keep it within its trading range.
(Reporting by David Mardiste and Marja Novak, writing by Patrick Lannin)