- The Washington Times - Tuesday, February 12, 2002

BUENOS AIRES (AP) The peso held its own against the dollar, but Argentines flooded exchange houses nonetheless yesterday after the government freely floated the local currency for the first time in 11 years.
Argentines, eager to unload their devalued pesos, waited in lines that stretched for blocks as the peso dropped as low as 2.5 to the dollar in early trading. The currency later rebounded, trading around the 2 pesos-per-dollar mark, where it had been for much of last week.
"For financial security, I only trust the dollar," said Ramon Ojeda, lining up with about 70 people outside the Paris Exchange House. "The last thing I want is to be stuck holding a fistful of worthless pesos."
President Eduardo Duhalde, hoping to win badly needed aid from the International Monetary Fund, last month abandoned the peso's decade-long one-to-one peg to the U.S. dollar, replacing it with a dual exchange rate.
But he quickly disbanded the official exchange rate of 1.4 pesos per dollar for some transactions, and his government is reportedly preparing to seek $25 billion in IMF emergency bailout funds to help revive the economy.
Analysts and investors closely tracked the peso's movement yesterday, watching for more trouble in South America's second-largest economy, now wracked by a four-year recession, double-digit unemployment and a $141 billion debt default.
By turning the peso loose on the free market, the government hopes to be able to better control the economy. The parity peg to the dollar left little room for the government to print money or make other adjustments to pull the economy out of its slump.
Presidential spokesman Eduardo Amadeo said the government was intent on keeping the peso from tumbling and that the central bank would be willing to sell off part of its dollar reserves to help prop up the currency.
It wasn't immediately clear if the central bank intervened in the market yesterday.
Central bank President Mario Blejer said he hoped the currency would settle around 1.5 to 1.6 pesos to the dollar within 60 days, and the government has said it would do all it could to stabilize the peso.
However, with the financial system near collapse the devaluation has left Argentina's banks teetering on the verge of bankruptcy some analysts said they expect the peso to weaken in the coming months.
Any dramatic weakening, they warned, could signal a return to the triple-digit hyperinflation that gripped the nation the last time the peso floated freely.
Those memories remain fresh for some Argentines who sought refuge in dollars. In Buenos Aires, hundreds gathered outside exchange houses, waiting hours to trade pesos for dollars.
Meanwhile, Economy Minister Jorge Remes Lenicov is to meet with IMF and U.S. Treasury officials in Washington today to discuss the possibility of a new loan package.
Last week, Argentine officials presented a new 2002 budget, responding to repeated IMF calls to devise a sustainable economic program.
IMF officials have not publicly commented on the plan.

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