Argentina's currency dived yesterday in its return to the foreign exchange market after 10 years, imposing a 41 per cent devaluation on ordinary Argentines who are running out of patience with economic chaos.
Traders said the peso fell to 1.60/1.70 against the dollar immediately after its debut on the free-floating market, from the old rate of one-to-one. For exports and official business it has been fixed at 1.40 to the dollar.
Thousands of Argentines took to the streets overnight to demonstrate against new government curbs on bank withdrawals, the first mass protests since 27 people died in rioting in late December that brought down the elected government.
Analysts say the peso could drop as much as 70 per cent lower in coming months as Latin America's third-largest economy spins further out of control.
The rate of the floating peso will be determined by the markets and used by the public for many transactions. Black market street traders had been offering dollars for between 1.50 and 1.60 pesos this week.
Some 10,000 people, exasperated by years of recession and mismanagement of the economy, protested in front of the Casa Rosada presidential palace after midnight. Police fired tear gas at stragglers after the demonstration, although it was mostly peaceful.
The latest protests were sparked by the new President Eduardo Duhalde's attempts to protect brittle banks by allowing them to keep some deposits under wraps until 2003.
"If I rob a bank, they throw me in jail. But if they rob me, then they say that's OK," one man screamed at television cameras as cars streamed by blasting their horns outside the historic building, where Mr Duhalde has worked since taking power just last week.
The government decreed on Thursday that checking accounts above $10,000 (€11,226) and savings accounts above $3,000 will be turned into fixed-term deposits, which means they will be untouchable for at least a year. After months of belief that Argentina's long-mushrooming crisis could be contained, currencies in neighbours Brazil and Chile have weakened in recent days on jitters over the devaluation. Argentina has already suspended payments on part of its $141 billion public debt.
But foreign governments have been unwilling so far to come to the aid of Argentina, with Duhalde's protectionist policies alienating the International Monetary Fund after he decided to default on part of the $141 billion public debt. -
