“Devaluation of Peso Seems Unavoidable“

The U.S. New York Times reported yesterday that Argentina, which decided to suspend payments on its debt, may need to enforce the painful, yet, unavoidable devaluation of peso within few weeks.

By quoting experts on the Wall Street, the New York Times reported that although the Argentine Adolfo Rodriguez Saa administration may delay the time of devaluation of peso, it may not be able to maintain the fixed exchange rate system if the massive withdrawal of deposit takes place.

The International Monetary Fund (IMF) and the U.S. have not made an official statement yet as of yesterday regarding the Argentina`s economic contingency measures.

Dow Jones reported that "Argentina`s decision to suspend payments on its debt does not surprise most investors since it was anticipated. Even if the devaluation of peso is taken place, its impact on financial market is not likely to be catastrophic."

Meanwhile, Central South American leaders including Uruguay President Horye Batye declared their supports for Argentina`s new economic policy, even though they pay all attention to the effects, which will be brought in by the President Saa`s decision to suspend payments on its debt. President Batye announced on Sunday that he would visit Argentina by himself to tell Argentina about the support from the whole member countries of the Southern Common Market.

lailai@donga.com