RIGA, Nov 9 (Reuters) - Latvia's central bank said on Monday it bought 234.0 million euros ($345 million) in net foreign exchange interventions last week and sold lats, although the currency was trading at the weak end of its intervention band.
In early trade on Monday, the euro was quoted at the central bank's intervention level at 0.7088/98 lats compared with 0.7081/96 last Monday.
"The bank was buying euros for treasury operations as the treasury must do under the memorandum with the IMF," one trader said. "The treasury does not go to the market."
Latvia has been struggling to hold its currency's peg to the euro since the global credit crisis sent its economy into a nosedive, requiring a 7.5 billion euro rescue package led by the International Monetary Fund (IMF) and European Union.
The trader added that outside of the government's transactions, the week was uneventful, but more trade is expected this week as businesses prepare to pay their taxes by the middle of the month.
In the week before last, the central bank sold 16.7 million euros, buying lats.
The central bank automatically accepts offers to buy lats when the euro hits 0.7098 lats, the top end of its 1 percent fluctuation band based on a central rate of 0.7028 lats.
Traders said the market expects the government's 2010 budget -- which has to satisfy international lenders -- to be passed in early December without any serious problems.
"If the budget fails this will be a big disappointment," one trader said.
The Latvian parliament has completed the first reading of the 2010 budget and the committee is collecting amendments for the second reading. These may include recommendations from the IMF, which has expressed concerns about some revenue raising plans.
The central bank announces interventions on Monday for the previous week, including on the Reuters page.
(Reporting by David Mardiste; Editing by Ruth Pitchford) (($1=.6684 Euro)

(via Tallinn newsroom, david.mardiste@thomsonreuters.com Reuters Messaging: david.mardiste.reuters.com@reuters.net)

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