Argentine Peso Strengthens Slightly
By: Bill Cormier
The Washington Post, February 12, 2002
Buenos Aires, Argentina –– Argentina's peso
strengthened slightly against the dollar Tuesday, the second day of a
critical test for the currency as it floated freely on the open market.
The peso traded at mid-afternoon at about 1.9 to the
dollar, slightly higher than on Monday, when it was going for 2.0. The
peso was cut loose from the dollar for the first time in 11 years on
Monday, but heavy restrictions on currency trading kept volatility at bay.
Though it was only a small rise, the fact that the
peso did not tumble after the uncoupling was good news for government
officials meeting with International Monetary Fund administrators in
Washington.
Argentina's economy is in a tailspin that began four
years ago with the onset of a recession that has sent joblessness soaring
above 18 percent and forced the country to default on its $141 billion
debt.
President Eduardo Duhalde is struggling to slash
public spending and keep Argentina's tottering financial system afloat in
the crisis.
His government is reportedly seeking as much as $25
billion in emergency aid from the IMF and other international lenders. But
first, his aides were meeting in Washington to discuss ways to build a
recovery plan.
Economy Minister Jorge Remes Lenicov planned talks
Tuesday with IMF Deputy Managing Director Anne Krueger and U.S. Treasury
Secretary Paul O'Neill.
Back at home, Duhalde announced plans to travel to
the Argentine interior next week to promote a public works program.
"It's befallen me to govern in difficult
times," Duhalde told reporters. "The people know I am doing what
I can."
Signaling tougher times ahead, the government has
said the economy will contract by nearly 5 percent this year, but
independent analysts said it could be as high as 9 percent.
In Buenos Aires, meanwhile, analysts said demand for
pesos came from Argentines hungry for local currency to pay bills after a
weeklong round of banking restrictions that preceded the free float of the
peso.
Corporations and exporters seeking dollars to pay
creditors and suppliers abroad are currently restricted from buying the
U.S. currency by Central Bank regulations meant to help the peso and the
troubled banking system.
Also crimping demand for dollars, the Central Bank
has ruled Argentines can only buy the greenbacks with cash, not with
checks or other instruments.
Observers say a steady peso is crucial to the
country's economic recovery plan. A dramatically eroding peso could spark
inflation and fresh social unrest.
Duhalde had devalued the peso already by nearly a
third just after taking office Jan. 2. He took over from the last elected
president, Fernando De la Rua, who resigned in late December amid street
riots that claimed 26 lives and called attention to years of failed
austerity plans.
Scattered but daily protests have highlighted the
still simmering discontent.
Some 500 construction workers marched Tuesday in the
coastal city of Mar del Plata to demand a revival of the moribund
construction industry. On Monday, hundreds of jobless Argentines used
debris and burning tires to barricade highways leading to Buenos Aires for
hours, creating huge traffic jams.
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