ARGENTINA: EMBATTLED PESO PLUMMETS TO RECORD LOWS AS DEPOSITORS SNAP UP DOLLARS TO PROTECT SAVINGS

Record ID: 448944

  • Title: ARGENTINA: EMBATTLED PESO PLUMMETS TO RECORD LOWS AS DEPOSITORS SNAP UP DOLLARS TO PROTECT SAVINGS
  • Date: 27th March 2002
  • Summary: BUENOS AIRES, ARGENTINA (MARCH 25, 2002) (REUTERS) 1. SLV LONG LINE OF PEOPLE IN FRONT OF BANK 0.06 2. MV PEOPLE IN QUEUES 0.13 3. SCU WOMAN LISTENING TO RADIO ABOUT EXCHANGE RATES 0.17 4. MV PEOPLE WAITING THEIR TURN TO ENTER BANK 0.20 5. TS PEOPLE LINING UP OUTSIDE OF BANK 0.30 6. PROVINCIA BANK'S SIGN THAT READS BUY 2.80, SELL 2.90 0.34 7. SLV/MV PEOPLE LINING UP OUTSIDE MONEY EXCHANGE HOUSES (2 SHOTS) 0.45 8. SCU SIGN WITH MONEY EXCHANGE RATES TILT DOWN QUEUE OF PEOPLE 0.50 9. SLV STREET FULL OF PEOPLE LOOKING TO EXCHANGE MONEY (2 SHOTS) 0.59 10. (SOUNDBITE) (Spanish), UNIDENTIFIED RESIDENT OF BUENOS AIRES, SAYING "I lost money because of the bank restrictions, I had a fixed rate in dollars, I had to buy pesos, then I had to put the money in different accounts, I took it out again, and what I want is to try to have the same amount that I started with, in dollars." 1.19 11. MV ACTIVITIES INSIDE THE MONEY EXCHANGE HOUSES; SCU HAND COUNTING OUT MONEY (2 SHOTS) 1.29 12. (SOUNDBITE) (Spanish), HORACIO, RESIDENT OF BUENOS AIRES, SAYING "This dollar is an absurd piece of paper, its stupid, it should be of no importance to us, it's not our money. In spite of this people are lining up to save ten cents or however much, it's sinking our country. Doesn't anyone realize this." 1.42 13. SV PROTESTERS HITTING THE BANK WALLS WITH POTS AND OTHER OBJECTS 1.45 14. MV MAN KICKING BANK WALL WITH SIGN THAT READS: BANK THIEVES, RETURN OUR DOLLARS" 1.51 15. SLV/SCU PROTESTERS 2.01 16. EXCHANGE CHALKBOARD THAT READS: BUY 3.50 SELL 4.00 2.04 17. SV PEOPLE LEAVING MONEY EXCHANGE HOUSE THAT WILL NOT PERMIT MORE BUSINESS 2.11 18. SV PEOPLE IN FRONT OF MONEY EXCHANGE HOUSE THAT IS CLOSED BUT IS STILL OPERATING (6 SHOTS) 2.35 19. SV PEOPLE ENTERING A MONEY EXCHANGE HOUSE 2.48 20. MV PEOPLE WATCHING 2.52 Initials Script is copyright Reuters Limited. All rights reserved
  • Embargoed: 11th April 2002 13:00
  • Keywords:
  • Location: BUENOS AIRES, ARGENTINA
  • Country: Argentina
  • Reuters ID: LVAC1U50M258VJ0IED4ZHH3B0HEJ
  • Story Text: Argentina's embattled peso has plummeted to record
    lows as depositors snapped up dollars to protect their
    savings, fuelling speculation President Eduardo Duhalde's
    government could fall.

    The peso plunged 22.5 percent on Monday (March 25, 2002) to
    sell at 4.00 per dollar amid rampant peso selling. The
    currency has lost 75 percent of its value against the dollar
    since its devaluation in early January.

    New Central Bank measures virtually forcing banks to trade
    at official buy and sell rates, rather than rates set by the
    market, did little to stem the panic buying of dollars as
    price rises swelled in basic goods like meat and gasoline.

    By Monday afternoon, the Central Bank had ordered banks
    and financial institutions to sell all surplus dollars in a
    desperate effort to stem the tide.

    "I lost money because of the bank restrictions," said one
    Buenos Aires resident. "I had dollars, then I had to buy
    pesos, then I had to put the money in different accounts. I
    took it out again, and what I want is to try to have the same
    amount that I started with, in dollars."
    Monday's fall followed the peso's 18 percent decline on
    Friday and fed speculation that Duhalde, Argentina's fifth
    president since December, could see his government collapse
    under a fresh wave of chaos in Latin America's No. 3 economy.

    With unemployment over 20 percent and little chance seen
    of snaring billions in loans from the International Monetary
    Fund anytime soon, many feared a return to December's violent
    street protests that left 27 dead.

    The devastating four-year recession that has
    impoverished thousands has also cost European and U.S firms
    with Argentine interests hundreds of millions of dollars in
    losses. Spanish stocks fell on Monday as investors feared the
    peso plummet in Argentina would further worsen Spanish firms'
    balance sheets.

    In the latest sign of social upheaval that has become a
    daily fact of life in Argentina, city workers blocked traffic
    on Monday to protest unpaid salaries in the northern province
    of Tucuman, while a crowd of several dozen in the beach resort
    of Mar del Plata occupied a bank in anger over the ongoing
    freeze on deposits.

    "This dollar is an absurd piece of paper, it's stupid, it
    should be of no importance to us" said Horacio, a Buenos Aires
    resident.

    "It's not our money. In spite of this people are lining up to
    save 10 cents or however much, its sinking our country.

    Doesn't anyone realize this?"
    After the Central Bank burned about 10 percent of its
    reserves over the last month trying to prop up the peso, it
    was forced to modify the official buy/sell rate twice by
    midday on Monday as the currency spiralled lower.

    Analysts said the new controls, which also shortened the
    hours of exchange houses, would only further alienate the IMF,
    which has called on Argentina to stop artificially propping up
    the peso and make further spending cuts if it wants aid.

    Others said it was another example of Duhalde's disastrous
    inability to make much-needed, extensive reforms as called for
    by multilateral lenders.

    Currency traders, many of whom admitted problems in
    understanding the new exchange rules, described Monday's
    activity as "chaos" and said no floor for the peso was in
    sight.

    Many economists say Argentina's root problem is its
    refusal to halt decades of overspending, which helped snap a
    decade-old currency peg that had made one peso equal to one
    dollar for a decade prior to January.

    December's violent street protests forced elected
    president Fernando de la Rua to resign, leading to a
    succession of leaders until Duhalde was appointed president by
    Congress in early January.

    Duhalde's argument that deep spending cuts would aggravate
    social tensions has fallen on unsympathetic ears at the U.S.

    government and the IMF, both of which said last week in blunt
    language that further reforms were needed.

    Those comments, which appeared as blaring headlines in
    Argentina's biggest newspapers last week, sparked fears on the
    street that a lack of IMF aid might lead to a massive banking
    collapse or a return to an era like 1989, when hyperinflation
    reached 5,000 percent.

    Duhalde had said on Sunday that no "special" measures
    would be taken to prop up the peso, saying it was the
    responsibility of the Central Bank, which has spent $1.2
    billion (U.S. dollars) over the last month to keep the
    currency's value under control.


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