Euro zone gets 18th member: Latvia

January 1, 2014: 6:12 AM ET
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LONDON (CNNMoney)

Starting Wednesday, Latvians began swapping their old currency -- lats -- in exchange for euros, making Latvia the 18th country to join the euro currency union.

The small ex-Soviet state has been preparing for the switch since European Union finance ministers formally announced in July that Latvia could adopt the euro.

Banks and post offices are extending their hours to accommodate people who are coming in to change their cash.

The exchange rate is set at one euro for 0.7 lats.

Related: Latvia among the top 10 ethical travel destinations for 2014

Many Latvians have been opposed to adopting the euro, arguing that it could lead to a spike in inflation.

But Latvians may be warming to the change. According to the latest Eurobarometer survey, from late December, 53% of the country now supports the currency.

Latvia is adopting the euro as the currency union is still recovering from the credit crisis and recession.

The government is hoping the introduction of the euro will boost economic growth by attracting more foreign investment to the country.

Related: Cyprus reeling 6 months after EU rescue

Latvia gained its independence from the Soviet Union in 1991 and joined the European Union and NATO in 2004.

It has a population of two million -- nearly 30% of Russian origin -- and annual gross domestic product of $28 billion.

The country suffered a tragedy in November after a deadly supermarket collapse in Latvia's capital led to the resignation of Prime Minister Valdis Dombrovskis.

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Latvia will be the fourth smallest member of the currency area, ahead of Cyprus, Estonia and Malta.

Latvia's other Baltic neighbor, Lithuania, is hoping to join the euro in 2015.

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