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. Last Updated: 07/27/2016

Free-Floating Peso Falls to 49¢

BUENOS AIRES, Argentina -- Thousands of sweating Argentines stood in long lines Monday to buy U.S. dollars and protect their savings as the first day of the full flotation of the peso in over a decade sparked fears of rampant inflation.

The streets of Buenos Aires' financial district were blocked to honking traffic by lines at foreign exchanges wrapping around entire city blocks.

But the peso confounded gloomy forecasts to close a touch stronger than before last week's suspended trade. After selling early on at 2.30 to the dollar it closed at 2.03, with traders reporting busy buying, but all in small quantities.

This gave some respite to a country that in recent weeks has devalued its peso currency and defaulted on $141 billion in public debt in a last-ditch effort to pull out of a financial crisis that has pushed it near to total collapse.

However, officials played down hopes that a visit to the International Monetary Fund by Economics Minister Jorge Remes Lenicov, who was due to leave Monday, would yield desperately needed help for the crippled banks of Latin America's No. 3 economy.

Ordinary Argentines took no chances with dwindling cash, many recalling the hyperinflation of the 1980s, when shops marked up products by the hour and wages could not keep up.

"I came at 2 a.m. to not miss a day's work. I've got some savings, and I want them in dollars," said one young woman in a line outside an exchange house in the city center.

"I have to buy dollars so I can be sure of buying my medicine for the next few months," said Olga, an 81-year-old pensioner who had been standing in line for three hours.

Markets and investors worldwide had watched for signs of further trauma in Argentina, which briefly had a fixed rate of 1.40 pesos per dollar for exports alongside a floating rate as a first stage in breaking with a decade-long peso-dollar peg.

Austral University economist and former senior Economy Ministry official Juan Jose Llach said there were "very few pesos in circulation, which could limit [peso] movements."

Exchange rate forecasts have ranged from just over 2 to the dollar to as much as 5 in the next few months -- shocking numbers for a population used to a currency unit on par with the dollar since 1991.

Argentines also had grown accustomed to zero inflation. The 36 million people have reacted with indignation to price rises that come on top of restrictions on cash withdrawals to stem a run on the banks that saw a quarter of deposits flee in 2001.

Imported goods have seen sharp price rises since the peso was devalued, but so too have some home-grown goods whose price is fixed in dollars on international commodity markets, like Argentina's world-renowned beef and agricultural produce.

"The political decision we have taken is not to allow abuse and to avoid people going without goods, especially medicine," said Hugo Miguens, the government official in charge of consumer rights and regulating competition.

But the situation is critical in the state-run health service. Health workers in Buenos Aires province denounced the lack of antibiotics, syringes and even food for patients.

"In one hospital a heart patient died after waiting three months for a pacemaker that never arrived. In another a baby with congenital heart problem can't be operated," said Jorge Yabkowski, leader of the health workers' union.