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''Latvia stands out as the weakest of the three because its external debt is very high and it’s got a big current-account deficit,'' said Win Thin, New York-based senior currency strategist at the oldest privately-owned U.S. bank. ''The contagion between the three is so strong that if Latvia broke the others wouldn’t be able to resist.''

Latvia, Estonia and Lithuania are ''under pressure'' to follow Russia and Kazakhstan in reducing their currency management and allowing devaluation, Nouriel Roubini, New York University professor, said last week.

BBH predicts that, by the middle of this year, the Baltic currencies could see a 50% decline against the euro, writes BLOOMBERG/LETA.

Thin also added that dwindling reserves may also force the devaluation of the Baltic currencies.

Latvia’s reserves have dropped 27% to USD 4.7 billion since July. Estonia’s declined 5% to USD 3.9 billion in the second half of last year, and Lithuania’s slumped 13% to USD 6.3 billion, International Monetary Fund data show.

''The Baltic states are going to run out of reserves and funds at some point, and they will look to contain the reduction of reserves,'' Thin pointed out.

''You cannot rely on external funding in a global environment like this,'' Thin said. ''The longer this crisis drags on, the higher the likelihood that their pegs will collapse.''