Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

President Tells Business To Hold Down Prices

BUENOS AIRES, Argentina -- President Eduardo Duhalde pleaded with businesses to keep prices steady as Argentines fretted that a devaluation could unleash inflation and rapidly erode their purchasing power.

Duhalde appealed Monday to supermarket owners, shopkeepers and other businesses as he began abandoning a decade-old link between the peso and the U.S. dollar, hoping to reverse the continuing decline of South America's second-biggest economy.

Economics Minister Jorge Remes Lenicov said the government would watch for any signs of resurgent inflation after the peso was freed from its one-to-one peg with the dollar.

"The success of this plan depends on keeping prices from shooting up," Remes said. "I'm asking [all Argentines] that they fight and push for stable prices."

But some Argentines are expecting the worst after 10 years of relatively stable prices.

"I'm worried we're about to go back 10 years," said 75-year-old retiree Ivan Toros, recalling the hyperinflationary days of the late 1980s, when a devaluation of the previous currency, the austral, led to runaway inflation and price hikes.

Those memories still are fresh for most Argentines.

"The last year has been bad enough," Toros said, referring to an unemployment rate that soared above 18 percent, forcing thousands of Argentines and businesses into bankruptcy.

At least one chain e-mail making the rounds in Buenos Aires exhorted Argentines to refrain from buying at businesses suspected of jacking up prices.

"Only we Argentines acting together can stamp out the speculators," the e-mail said.

Despite reports of price increases, other merchants said they were unable to raise prices during a grinding recession that has put left many ordinary Argentines strapped for cash.

"I'm trapped," said Manuel Rougier, owner of a Buenos Aires computer store. "I need to raise prices because I sell imported goods. But if I do, I fear customers won't step foot in here again."

As the government talked more openly over the weekend about devaluation, thousands of Argentines crowded supermarkets, buying up televisions, VCRs and food for fear that prices soon might soar. Many more flocked to stores, unloading pesos they feared could be worthless.

The Buenos Aires Stock Exchange was closed Monday because of a two-day banking holiday ordered by the government as it shuts down access to dollars.

The weakening of the peso heralds a radical departure from the unabashed free market era in which Argentina was the darling of so-called emerging markets.

"The last 10 years have been the longest period of stability that I can remember here in Argentina," said 45-year-old Jorge Vazquez. "What comes next is anybody's guess."

(AP, Reuters)