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Argentina Eases Partial Bank Freeze

December 2, 2002

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BUENOS AIRES, Argentina (AP) _ President Eduardo Duhalde eased a year-old partial banking freeze on Monday, allowing Argentines unfettered access to their checking and savings accounts.

``Today, life begins without the ’corralito,‴ declared Alfred Atanasof, a government spokesman, using the Spanish nickname for the widely impopular restrictions imposed last Dec. 1 as the economy unraveled.

Atanasof said the government had decided to relax the restrictions on the anniversary of the freeze in an effort to stimulate the country’s stagnant economy. Restrictions still remain on longer-term certificates of deposit.

Since October, the government has been slowly reopening the banking system, which was virtually locked down last year after Argentines pulled $20 billion from the banks during a panicky run that threatened to collapse the financial system.

At major banks in Buenos Aires, Argentines lined up to withdraw cash from newly unfrozen accounts Monday. Others crowded exchange houses, hoping to change their pesos for dollars.

Despite the increased demand for dollars, the peso held steady and market analysts reported the Central Bank sold $30 million to keep the currency firm and trading at 3.55 to the dollar at government-run exchange houses.

Leonardo Chialva, an analyst at the Argentine firm Delphos Investment, said the peso’s value could face some pressure in coming days as ``some Argentines seek shelter in dollars.″

His remarks reflected the views of many waiting in lines in downtwon Buenos Aires _ some having arrived at 6 a.m to stake out a place until banks opened.

Uncertainty about the country’s future has driven some Argentines to unload pesos in favor of dollars.

``I have lots of doubt about the country,″ said Luis Paganini, 63, as he waited to exchange pesos for dollars. ``What happens if prices start going up, or if there is hyperinflation again.″

His concerns mirror other Argentines’ worries about political and economic prospects for this South American country of 37 million, now entering its fifth year of recession and suffering from 22 percent unemployment.

Stalled negotiations with the International Monetary Fund for financial assistance have complicated an end to Argentina’s economic malaise.

Meanwhile, political infighting among the government’s party over its candidate for April’s presidential elections has weakened Argentines’ confidence that the crisis is easing.

Over the past year, Argentina’s economy has been slowly stabilizing, leading the government and some economists to wonder whether the economy was finally bottoming out.

But among those lining up outside the capital’s exchange houses Monday, sentiment about the country was less than rosy.

A 70-year-old retired teacher, who declined to give her name, said she remained concerned. ``Although I love my country, I have to admit there is too much uncertainty″ not to fear the future, said the woman.

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