July 9, 2013 / 5:41 PM / 4 years ago

UPDATE 1-Fitch upgrades Latvia on euro zone invitation

NEW YORK, July 9 (Reuters) - Fitch on Tuesday upgraded Latvia further into investment-grade status, citing the country’s invitation to join the euro zone in the coming year.

The agency raised Latvia to BBB-plus from BBB. The outlook is stable.

“Euro adoption will enhance economic policy coherence and credibility compared with the current exchange rate peg to the euro,” Fitch said in a statement.

“The Latvian economy is closely integrated with the EU through trade, investment and substantial ownership of its financial sector by Nordic parent banks.”

Latvia is ready to become the 18th country using the euro from the start of next year, the European Commission announced last month.

Standard & Poor’s rates the country BBB-plus with a stable outlook. Moody’s rates Latvia Baa2 with a positive outlook.

Latvia underwent one of Europe’s toughest austerity programs after a 2008-2009 crisis wiped a fifth off its GDP.

To adopt the single currency, Latvia reduced its budget deficit to below the EU ceiling of 3 percent of gross domestic product last year, cutting it to 1.2 percent.

Its public debt is around 41 percent of GDP, well below the EU ceiling of 60 percent, and its currency has been pegged to the euro since it joined the European Union in 2004.

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