The Argentine peso held firm against the U.S. dollar Monday as Argentine banks and foreign currency exchange houses re-opened after a week-long shutdown.
Lines formed in front of banks and currency exchange houses in Buenos Aires Monday, the first day of business after a week-long bank holiday. After losing ground in early trading, the Argentine peso then stabilized against the U.S. dollar. The currency traded at 3.10 pesos to the dollar Monday, the same rate as on April 19 when the Central Bank declared the bank holiday.
The shutdown was ordered to give Congress time to pass a controversial government proposal that would have converted billions of dollars in deposits to long-term bonds. The aim of the proposed legislation was to prevent a collapse of the banking system.
However, Congress refused to act on the proposal saying it would favor foreign-owned banks at the expense of Argentines. Instead, lawmakers approved a measure that makes it more difficult for depositors who have won lawsuits against a four-month old banking freeze from withdrawing their money.
Before the bank holiday was declared, these depositors had been withdrawing an estimated $50 million a day from the banks.
Monday's resumption of normal banking operations coincided with the first work day of Argentina's new Economy Minister, Roberto Lavagna. Mr. Lavagna, a foreign trade specialist, was named Friday by President Eduardo Duhalde to replace his Economy Minister who had resigned several days earlier. Mr. Lavagna is the sixth person to hold the job in a little over a year.
In a television interview Sunday, Mr. Lavagna placed priority on negotiating a new loan agreement with the International Monetary Fund. Argentina is seeking a $9 billion emergency bailout to help stabilize the economy. IMF officials say the money will not be forthcoming until Argentina comes up with a sustainable economic recovery plan that includes sharp budget cuts by Argentina's 23 provinces.
Argentina is struggling to emerge from a four-year recession that has left the country bankrupt, and millions of people unemployed. The economic crisis, which brought down two Presidents in December, threatens the stability of the Duhalde government, which has been in office since January.