Argentines desperately seeking dollars

Argentines are on edge since the government imposed draconian measures to control money changers, measures which have complicated their compulsive buying of dollars which, alongside football, is a national pass-time. So-called cellars, the few places where US dollars can still be illegally bought, have sprung up in the capital, but the greenback in these places is now sold at a premium -- up to six pesos. The official exchange rate is 4.5. The vendors lining Florida street in the city center are constantly at risk of being caught by policemen, who have dogs trained to sniff out dollars. "The dollar is an Argentine disease," economist Miguel Kiguel, director of Econviews Institute and a consultant for the Inter-American Development Bank, said in an interview with AFP. "Decades of instability during which people saw their savings seized or evaporate in 2001 when the pesos crumbled" led to the current hysteria, he explained from his 16th-floor office in Buenos Aires. Dollar fever rose when President Cristina Kirchner opted to impose radical controls on currency exchanges and curb imports to protect $46 billion in reserves and a $10-billion trade surplus. "I myself don't buy the dollar," said Augusto, beating a drum in an anti-government protest on posh Santa Fe Avenue. "But we must be free to do what we want with our money," he added. He and 4,000 other middleclass protestors were railing against what they say is a corrupt government that has created economic havoc and imposed draconian restrictions on buying dollars. "With my money, I do what I want!" or "I want to save without explanation!" said the banners around Buenos Aires. "The saver doesn't know where to go any more," said psychiatrist Lia Rincon of Buenos Aires University. "He's looking for his bearings." These last weeks, tax authorities have stopped authorizing exchanges of pesos for dollars, except for trips abroad, in a bid to stop hoarding. "People will have to accept that it is impossible to return to the time (in the 1990s) when the pesos was pegged to the dollar," said Mario Rapoport, an economist at the Institute for historic, economic and social studies. Meantime, people are facing increased hardships while media reports have revealed that members of the government are holding onto their dollars. Kirchner herself was forced to announce on television that she would convert her dollars savings into pesos, a total of $3 million, according to the media. However "pesofying" the economy, could backfire in many sectors such as real estate which rely on the dollar. "We risk slowing economic activity," predicts economist Eduardo Curia. Growth projections for Argentina are on the decline, after reaching an average eight percent between 2003 and 2011 (except in 2009 when a recession hit). "There are unfortunately risks of stagflation," in other words combined inflation and a recession, says Kiguel. "In Chile or Brazil, interest rates are higher. It's the price to pay for a stronger currency."