Latvia's central bank has pledged to defend the country's peg to the euro, despite increasing calls for it to be scrapped.

Fears are growing that the peg will become increasingly difficult to defend as the country's economy slips deeper into recession.

"I am slightly angry at some so-called experts who are throwing around ideas and not really thinking," Martins Gravitis, of the central bank was reported saying. "The government and the central bank are unanimous on the peg being the cornerstone of our economic programme."

Prime Minister Valdis Dombrovkis also pledged to avert a devaluation.

"These rumors and speculations should finally be stopped" he told Latvian Independent Television. The Latvian currency would not be devalued, he said.

On Wednesday an auction of Latvian debt failed, sending the Lat near to the lower end of its range against the euro.