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Tuesday, 15 January, 2002, 03:00 GMT
Argentina's president calls for unity
A man walks near a sign in Buenos Aires that reads: Argentina, now or never. Buy national products and labour
A sign calling on Argentineans to by local products
Argentina's President, Eduardo Duhalde, has called for an "historic national dialogue" to take the country out of the worst economic crisis of its history.

A cycle of scandalous - and dangerous - Argentine illusions has come to an end

President Eduardo Duhalde
"I want to be one more worker in this convergence that unites the main members of political forces, business, labour and social groups to deal with the destruction that has brought us to the brink of anarchy and violence," Mr Duhalde said in a pre-recorded television message.

Surrounded by Roman Catholic Church leaders and United Nations representatives, Mr Duhalde said government reform would follow emergency measures to stabilise the economy.

"A cycle of scandalous - and dangerous - Argentine illusions has come to an end," the president said.

Call for international help

The International Monetary Fund has sent a team to investigate the situation in Argentina, whose default on its debts was in part precipitated by the IMF's refusal to grant a loan of $1.3bn after Buenos Aires broke a promise to balance the budget.

But Mr Duhalde believes it could be persuaded to contribute to Argentina's economic recovery. Officials say the country needs anything up to $20bn to get back on its feet.

Argentina's President, Eduardo Duhalde
President Duhalde has vowed governmental reform
Jorge Todesca, Argentina's current finance minister, has been scathing about the IMF's performance. But that will not necessarily stand in the way of new loans.

The stock markets remained closed again on Monday because the lack of cash.

The country's bourse has been shut for all but a handful of sessions since 20 December, when widespread rioting forced an interim government led by Fernando de la Rua to step down.

Under emergency legislation introduced late last year in a bid to prevent a run on the banking system, cash withdrawals for private account holders are limited to 1,500 pesos a month.

Cash shortages help peso

Acute cash shortages also helped to shore up Argentina's struggling currency on the foreign exchange markets, with many Argentines forced to exchange scarce dollars for pesos.

Exchange houses were buying dollars for around 1.60 pesos early on Monday, up from around 1.65 pesos on Friday, and economists expect the peso to fall further.

The peso's devaluation is intended to lift Argentina's economy through increased exports, while the peso-dollar exchange rate has been fixed at 1.4 to one for international transactions, in a bid to prevent the price of imported goods from rising in an inflationary spiral.

Foreign investors wary

As sporadic rioting resumed in Buenos Aires early on Monday, concerns re-emerged over the impact of the crisis on foreign investors.

US bank FleetBoston Corp, a long-standing investor in Argentina, said it planned to delay reporting its results for the final three months of the financial year until the situation became clearer.

The bank had been due to publish its results on Wednesday.

Meanwhile in Europe, Spain's Ibex index of leading shares fell by 2.65% to a two-month low amid fears that many of the country's top banks and corporations would be hurt by the Argentine crisis.

Spanish telecoms giant Telefonica and BBVA bank, both major players in Argentina, were trading 3.8% and 4.3% lower respectively on Monday afternoon.

In the UK, shares in HSBC bank, which also has significant Argentine investments, had fallen by 2.4% in late London trade.

The renewed corporate worries come despite reassuring reports late last week from credit rating agencies Standard & Poor's and Fitch, which both said that Argentina-related losses at most European and US banks should be manageable thanks to prudent hedging.

See also:

20 Dec 01 | Americas
The night Argentina said 'enough'
13 Dec 01 | Americas
Argentina delays pension payments
07 Dec 01 | Business
Argentina seizes pension funds
21 Aug 01 | Americas
Argentine salaries paid in bonds
13 Jan 02 | Business
Argentina lashes out at IMF
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