Fears that Latvia will devalue its currency have re-emerged after the government said it would cap mortgage losses.

Finance ministry officials have affirmed the country's commitment to the peg in recent days. But investors believe the government is more likely to devalue after plans emerged Tuesday that could limit the amount that banks can claim from mortgage holders. Valdis Dombrovskis, the prime minister, said he planned to fix borrowers' liability to the value of their mortgage. "The