Argentina to Issue the Third Currency Next Month, It Cannot Be Exchanged with Peso and Dollar

The Argentine government officially announced on Monday that it would introduce the third currency called `Argentino` in early January, 2002.

Minister of Economy Rodolfo Frigerri announced that "the government decided to issue a new currency in early January, 2002, which will be introduced in the market along with peso as well as dollar. However, the new currency cannot be exchanged with dollar." He made clear that the new currency would be non-convertible money.

"The new currency will be used mostly for paying the wage and pension of the government officials and for purchasing the government fixtures." added Minister Frigerri. It was said that President Adolfo Rodriguez Saa gave the name `Argentino` to the new currency at the cabinet meeting.

Minister of Athletic Daniel Schioli said, "Although the exchange rate of the new currency against peso as well as dollar is one to one, the new currency is not convertible."

It is likely that 12 kinds of bonds, which have been used as currency issued by the state government or the central government, will be abolished when the new currency is introduced.

The foreign press reported that although the Argentine government`s introduction of the new currency is a prescription to solve the lack of liquidity, it could be a preliminary step to devalue peso.

President Rodriguez Saa said in an interview with a weekly magazine, "The declaration of the defaulting on the national debt amounting to 132 billion dollar is a temporary measure that is different from the suspension of payment. The Argentine government will ask for the support to the international loaners including the U.S. and Spain for the economic recovery."

Meanwhile, Italy and Spain expressed that it would expand the limit of the credit loan to Argentina on 24th.

Jung-Ahn Kim credo@donga.com