Argentina may return to fixed exchange rate

Argentinian President Eduardo Duhalde is considering returning to a fixed exchange rate to help halt an alarming slide in the value of the peso.

The currency has lost nearly 70% of its value since January and now trades at more than three pesos to the US dollar.

Duhalde abandoned Argentina’s 11-year one-to-one peg with the dollar days after taking office in January, insisting that the inflated strength of the peso was at the root of the country’s financial woes.

Officials said yesterday that the new peg could be at a rate of 3.5 pesos to the dollar.

Duhalde is also working to find a new economy minister following Tuesday’s resignation of Jorge Remes Lenicov. There has also been speculation of a major Cabinet shuffle in coming days.

The new economy minister will face the daunting task of trying to help Argentina restore confidence among international investors following a default on the country’s huge debt earlier this year.

The International Monetary Fund is also demanding deep spending cuts as a precondition for fresh aid.