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. Last Updated: 07/27/2016

Argentina Puts Off Peso's Devaluation

BUENOS AIRES, Argentina -- Argentina's new government, buffeted on all sides by pressure from banks, foreign companies and an angry public, on Wednesday delayed yet again its implementation of a devaluation of the local currency after 10 years on par with the dollar.

The central bank said it would extend a long-standing ban on official foreign exchange trade through Thursday, putting off again the peso's trial by fire with markets after the government said Sunday it would devalue the currency by almost 30 percent.

Economics Minister Jorge Remes Lenicov apologetically told the recession-mired nation in a televised address that it would be "difficult" to lift a partial freeze on bank deposits and said details on a timetable for their return would not be announced until Thursday.

Meanwhile, popular disgust over the government's perceived foot-dragging as it tries to navigate a financial minefield led some Argentines to beat pots and pans from their balconies -- a small-scale, much more peaceful version of the protests that brought down two presidents last month.

Few things have angered Argentines as much as the caps permitting them only 1,500 pesos in cash withdrawals from banks, but analysts say lifting them would prompt an instant run on deposits that could sink several banks.

"It's not easy to take down the banking curbs, as nasty as that sounds," Remes Lenicov told a news conference.

The extension of the banking holiday came as the government was bombarded with advice and lobbying on its plan to end a four-year recession.

In a suggestion that proposals made so far do not meet with U.S. approval, U.S Treasury Secretary Paul O'Neill urged Argentina to put quickly in place new economic measures that could be supported by the International Monetary Fund.

Remes Lenicov met Tuesday with the heads of Argentina's top banks, some of which are said to be under a liquidity crunch from the government's popular decision to convert dollar debts up to $100,000 into devalued pesos.

One Argentine government official said: "They are pressuring us from all over. But we're not going to give in."

As expected, Remes Lenicov said he would ease the banking curbs in place since Dec. 3, saying Argentines would now be able to withdraw up to 1,500 pesos from some accounts, up from a previous level of 1,000 pesos.

But the No. 2 man in the Economics Ministry, Jorge Todesca, said earlier that deposits in dollars -- which account for roughly 70 percent of the total deposits in banks -- might not be returned until the end of this year.

Duhalde said the bankrupt South American nation is to have a twin exchange rate -- a fixed peso pegged at 1.4 to the dollar and an unofficial floating peso, mainly for tourism.

The black market was ahead of the curve Wednesday. Street traders were offering dollars for between 1.5 and 1.6 pesos in Buenos Aires, onlookers said.

The U.S. government said it planned to keep working with Argentina through the IMF, which froze $1.3 billion in aid to the country last month in anger at chronic budget overspending.

Argentina's bankrupt government has asked oil companies to make a $1.2 billion "contribution" to the country's coffers as an alternative to its plans to impose hefty taxes on oil exports, the Financial Times reported in its online edition Thursday.

The one-off payment would allow Argentina to raise cash immediately, rather than wait for monthly tax receipts on oil exports. Based on oil export revenues of $3.5 billion in 2000, analysts estimate that a 20 percent to 30 percent tax on exports could cost the sector $3.5 billion to $5 billion over the next five years, the newspaper said.