Argentina's currency has dived in its return to the foreign exchange market after ten years, imposing a 41 per cent devaluation on ordinary Argentines who are running out of patience with economic chaos.
Traders said the peso fell to 1.60/1.70 to the US dollar immediately after its debut on the free-floating market, from the old rate of one-to-one. For exports and official business it has been fixed at 1.40 to the dollar.
Analysts say the peso could drop as much as 70 per cent lower in coming months as Argentina spins further out of control.
The government decreed yesterday that current accounts above $10,000 and savings accounts above $3,000 will be turned into fixed-term deposits - which means they will be untouchable for at least a year.
After months of belief that Argentina's long-mushrooming crisis could be contained, currencies in neighbours Brazil and Chile have weakened in recent days on jitters over the devaluation. Argentina has already suspended payments on part of its $141 billion public debt.
But foreign governments have been unwilling so far to come to the aid of Argentina, with the country’s protectionist policies alienating the International Monetary Fund after it decided to default on part of the $141 billion public debt.