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Tuesday, 12 February, 2002, 01:38 GMT
Argentina's peso passes first test
Peso and dollar notes
Everyone would prefer pesos to dollars
Floating freely for the first time in more than a decade, the Argentine peso ended trading stable against the United States dollar on Monday.

After an initial sharp fall, the peso recovered to end at 2.15 to the dollar, close to what it was worth before last week's banking holiday.

Jorge Remes Lenicov
Mr Remes Lenicov will have a hard job with the IMF
But the MerVal stock exchange index lost over 10%, and the BBC correspondent in Buenos Aires says people still expect the peso to plunge in value over the coming weeks.

Economy Minister Jorge Remes Lenicov is travelling to Washington in an effort to persuade the International Monetary Fund to release more than $20bn in aid to help lift the country out of its current financial crisis.

For the past 11 years, until the beginning of January, the exchange rate to the dollar had been fixed one-to-one.

Its new value means that the Argentinian currency has lost 54% of its value.

US meeting

Mr Remes Lenicov is due to meet US Treasury Secretary Paul O'Neill on Tuesday.

Crowds outside banks in Buenos Aires
People are still massing outside banks to try and get their money
He will also hold talks with IMF officials, in the hope that the international body will resume aid to Argentina.

But that is likely to be a slow process.

"There isn't much to be expected from our side," said IMF spokesman Francisco Baker.

An Argentinian delegation expected to discuss a possible rescue programme with IMF officials in Washington, if Mr Remes Lenicov's talks go well.

Call for patriotism

Many Argentinians are still eager to get rid of their pesos, before the exchange rate worsens again.

Pascual Giancavelli, one of more than 100 people queuing at Cambio America, an exchange office, said there was far too much uncertainty: "I'm looking to dump my pesos as fast as I can."

"Would you want to be stuck holding pesos right now?" added the 37-year-old employee of an advertising company, who had just taken 1,500 pesos out of his current account.

Argentine protester
The banking restrictions angered many people
The free float of the peso is part of a restructuring plan aimed at restoring economic and social stability to a country racked by economic crisis and bloody street protests since the former government defaulted on debt payments late last year.

Over the weekend, President Eduardo Duhalde criticised currency speculators.

"There are campaigns, which are not very patriotic, that induce a rise of the dollar with no consideration for the fact it could be very dangerous for all producers and that it generates uncertainty," he said.

"They want to generate a climate of hyperinflation, saying the dollar will be at 10 pesos.

"It is absurd, but the problems of this country are fed by absurdity," Mr Duhalde said.

Last week the president reached agreement with provincial governors to cut state spending by 1bn pesos in an effort to balance the country's books and release up to $20bn (14bn) in international aid.

And on Sunday, Argentine newspapers reported that 21 embassies and 13 consulates around the world would close, as a cost-cutting measure.

The BBC's Peter Greste in Buenos Aires
"Most people don't have much money to buy dollars"
Lacey Gallacher, Latin America economics analyst
"I don't expect any agreement from the IMF anytime soon"
The BBC's Andrew Walker
"Mr Koehler will want to be convinced that Argentina now has a viable economic prgoramme"
See also:

09 Feb 02 | Americas
Argentina overhauls political system
08 Feb 02 | Business
Argentina to resume IMF talks
06 Feb 02 | Business
Argentina halts currency trading
04 Feb 02 | Business
Argentina unveils crisis package
30 Jan 02 | Business
IMF tells Argentina to cut spending
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