- The Washington Times - Wednesday, February 13, 2002

BUENOS AIRES (AP) Argentina's peso strengthened slightly against the dollar yesterday, the second day of a critical test for the currency as it floated freely on the open market.
The peso traded at midafternoon at about 1.9 to the dollar, slightly higher than on Monday, when it was going for 2. 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 lenders. But first, his aides were meeting in Washington to discuss ways to build a recovery plan.
Economy Minister Jorge Remes Lenicov planned talks yesterday with IMF Deputy Managing Director Anne Krueger and U.S. Treasury Secretary Paul H. O'Neill.
Back at home, Mr. 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," Mr. 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 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 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.
Mr. 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.
About 500 construction workers marched yesterday 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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