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PREVIEW / WEEK OF APRIL 29-MAY 5

Argentine Peso to Float, Banks to Reopen

April 29, 2002|Reuters

Argentina's new economy minister will allow banks to reopen and a battered currency to float today, emphasizing his free market and pro-IMF credentials and appeasing a cash-hungry public unable last week to access ATMs or use credit cards.

"The economy has to be oxygenated," Roberto Lavagna said in an interview with Clarin newspaper on Sunday, a few days after his predecessor resigned amid a mounting financial crisis that forced the government to close banks for a week.

The move to reopen banks and foreign exchange markets will give some relief to Argentines, already hit by a currency devaluation and a four-year recession. They were squeezed even more last week after the government tightened a five-month-long deposit freeze to stop a drain on a collapsing financial system.

The decision to allow the peso to trade freely also will please the International Monetary Fund and investors, worried after President Eduardo Duhalde hinted he could fix the peso after it slumped 70% against the dollar this year and sparked rising inflation.

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