- The Washington Times - Tuesday, March 26, 2002

BUENOS AIRES (AP) New government restrictions on currency trading did little to halt the peso's crumbling value yesterday as worried Argentines flooded exchange houses seeking dollars as a safeguard.
The peso tumbled 20 percent despite government moves to scale back trading hours and fix prices at some currency houses, falling for the sixth straight day to 3.9 to the dollar. The peso closed at 3.1 on Friday.
The weakening currency added a new problem to those already plaguing President Eduardo Duhalde's attempts to rescue Argentina from a four-year recession.
The peso's depreciation comes amid concerns that a spike in consumer goods prices could push the troubled country into further economic chaos.
The battered peso has lost more than 65 percent of its value since January. So Argentines, worried that the economy is again taking a turn for the worst, crowded Buenos Aires banks and exchange houses to shed their pesos.
The currency's plunge follows a decision two months ago to let the peso float against the dollar. The devaluation has raised fears of inflation and further turmoil in South America's second-largest economy.
For more than a decade until the January devaluation, the peso had been pegged at one-to-one with the dollar, making the Argentine currency one of the most stable in Latin America.
But those days seemed a distant memory yesterday for many Argentines who lined up to buy dollars.
"I'll pay any price," said Estela Solari, a 43-year-old housewife, waiting behind dozens of people to change money at a Buenos Aires bank. "Buying dollars is the only way I can protect my money."
As the peso's value has weakened, rising prices on fuel, medications, and groceries have sparked fears that inflation could again sweep across Argentina as it did in the late 1980s the last time economic upheaval befell the country.
"Prices on milk, gas, bread even beef have all shot up," complained schoolteacher Carolina Arteaga, who earns 1,200 pesos ($400) a month. "But my salary has stayed the same."
Political analyst Serge Berensztein warned the strengthening of the dollar combined with a continuing rise in prices could indeed leave Argentina on the cusp of further economic trouble.
"If this continues, Argentina could be on its way to facing hyperinflation for the third time in its history," he said.
Earlier this month, the government reported prices on foodstuffs and other goods had risen more than 3 percent last month after inching up 2 percent in January.
But the rapidly depreciating peso which fell 20 percent on Friday led some Argentines to flood grocery stores over the weekend to stock up on goods like diapers and other items with imported materials that could become more expensive if the peso's value continues to tumble.
The government has blamed the rising pressure on the peso on a flood of court rulings that have overturned a government-ordered banking freeze, allowing thousands of Argentines access to their savings.
Many of them, the government contends, are quickly converting their pesos into dollars.
Meanwhile, some analysts said the government restrictions would be counterproductive and only further help drive down the peso's value.
Immersed in a four-year recession, the battered economy has triggered a $141 billion-debt default and pushed thousands of Argentines into unemployment, now at more than 22 percent.


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