Government measures failed to halt the slide of Argentina's peso Monday as Argentines rushed to convert their currency to safe-haven dollars. Shoppers packed supermarkets to stock up on basic essentials ahead of rising prices as fears grow that a punishing inflationary cycle is starting.
President Eduardo Duhalde tried to bolster the peso through modest measures designed to complicate foreign-exchange transactions. The government forced exchange houses to open late and close early Monday. The central bank worked with banks to offer dollars at a cheaper peso rate than the high price at which exchange houses were selling dollars.
But when exchange houses closed Monday, it took about four pesos to buy one dollar. In January, the peso was pegged one-to-one with the dollar, but since its devaluation one peso buys a U.S. quarter _ a 75 percent drop in the peso's value.
If Argentina's peso continues sinking and prices continue rising, Duhalde might soon face the same violent street protests that toppled Fernando De la Rua on Dec. 20 and his successor a week later. The subsequent political and economic chaos triggered a default on more than $141-billion in government debt, the largest default by one nation.
Argentines lined up at banks across Buenos Aires before sunrise Monday, worried because the peso had fallen about 18 percent Friday to close around 3.1 to the dollar. Monday's loss amounted to a one-day drop of 33 percent, a move that quickly translates into higher inflation.
"Things are getting more costly, our peso is losing value and we have to seek refuge for our savings," said Juan Carlos Gallo, a small-business man at the back of a long line to buy dollars. "That's what people are doing here. People don't believe in Duhalde or the government."
Gustavo Srael, a print-shop owner, arrived soon after sunrise, worried by comments by the president in Sunday newspapers.
"Duhalde told one of our newspapers (Clarin) that even if the peso goes to nine, we will have to accept that," Srael said, worried that his pesos would be worth less later in the week.
Duhalde told Clarin on Sunday there would be "no special measures" to halt the peso's slide. He said he was optimistic that a deal with the International Monetary Fund is just weeks away. IMF negotiators are due back next week in Argentina and have not been as upbeat. The fund demands that Argentina reduce government spending further and wants Argentine provinces to stop issuing bonds that effectively serve as new money and undermine the value of the peso.
In the coastal city of Mar de Planta, angry savers briefly took over a bank at midday Monday. In the capital, Buenos Aires, there were scattered spontaneous street protests. Near the city center, a few hundred people banged on pots and pans, blocking traffic and demanding an end to a government-imposed freeze on bank deposits and a return in dollars to savers who had kept their deposits in dollars.