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Argentina Clamps Down on Currency Speculators - 2002-06-03


The Argentine government warns it will crack down on currency speculators who, it says, are undermining economic recovery. The government warning comes as Argentina moves closer to meeting the demands by the International Monetary Fund for obtaining a new loan.

Argentine Cabinet Chief Alfredo Atanasov says currency speculation threatens to derail the progress made by the government in attempting to stabilize the country's tattered economy. Speaking to reporters Monday, Mr. Atanasov said the government will take action against currency speculators.

He says, "We are going to act very firmly against those who are speculating on the rise of the dollar, and against those who are not liquidating their hard currency earnings." The Argentine official went on to say the warning is not aimed at individuals who are trading pesos for dollars, but against major exporters who are delaying exchanging their dollar earnings in the hope of getting a more favorable rate later.

The Argentine peso has lost more than 70 percent of its value against the dollar since it was devalued in January. Prior to the devaluation, the peso had been pegged one-to-one to the dollar for ten years.

Mr. Atanasov also says Argentina has made good progress in meeting the conditions imposed by the International Monetary Fund for obtaining a new loan. Last week, the Argentine Senate repealed an economic measure from the 1970s, which the IMF had opposed.

Also, most of Argentina's provinces have agreed to slash spending as required by the IMF, and Mr. Atanasov says he expects the others to follow suit. Overspending by the provinces, which the federal government was obliged to cover, is seen as one of the main reasons Argentina was forced to default on its debts.

In another development key to winning IMF approval, the government Saturday unveiled a plan to phase out over time an unpopular freeze on citizens' bank deposits. The plan offers depositors the choice to convert their frozen money into bonds that mature between three and ten years.

The Argentine government is seeking an IMF loan to help stabilize the economy. Argentina is struggling to emerge from a four-year recession that has left the country bankrupt and millions of people unemployed.

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