Argentina orders banks to sell dollars to halt peso's slide

BUENOS AIRES, Argentina -- Argentina's government ordered banks to sell part of their dollar holdings Friday in a bid to halt a slide of the beleaguered peso, which has lost more than half its value against the dollar since January.

The currency's plunge following a decision two months ago to let it float against the dollar has generated fears of inflation and a further deterioration of Argentina's crisis-ridden economy.

The central bank ordered banks to sell off their dollar holdings until they represented no more than 5 percent of their total currency holdings by the close of business Friday.

The banks would not disclose how much this obliged them to shed, but the peso strengthened Friday after hitting new lows on Thursday. The peso closed Friday 2.32 to the dollar, up from 2.39 the day before, after the Central Bank took in pesos for the dollars it released. That exchange limited the amount of pesos in circulation and thus increased their value.

President Eduardo Duhalde, who is struggling to stabilize a recession-wracked economy, vowed to take any steps necessary to support the peso, saying during a radio address: "We'll make the dollar fall."

His comments came a day after the central bank reportedly spent between $100 million and $150 million in reserves to help prop up the peso. Some analysts and economists criticized the move, saying Argentina could ill-afford to spend its foreign reserves.

When he took office in January, Duhalde immediately ended the 10-year-old system of fixing the peso's value at one-to-one parity with the U.S. dollar. The move was made in the hopes a cheaper peso would boost exports and lift South America's third-largest economy out of a grinding four-year recession.

Also Friday, thousands of unemployed and union workers marched to congress to demand jobs and increased social programs for the poor.

In an earlier protest, dozens of Argentines banged pots and pans outside of Buenos Aires banks demanding full access to their savings -- now locked up under a government banking freeze.

The protests come as the International Monetary Fund scrutinizes Argentina's finances as part of government's efforts to lure back billions of dollars in aid.

Anoop Singh, head of the IMF mission visiting Buenos Aires, was wrapping up a 10-day visit Friday. He said talks with Duhalde's government would continue but would not say when he might return.

Argentine officials say they need at least $23 billion in bailout funds to bolster the shaky banking system and mount an economic recovery.

IMF officials have repeatedly said Argentina must first undertake more economic reforms before any additional aid is released.