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Events that led to the peso's float

Dec. 10, 1999: Fernando de la Rua inaugurated as president after campaigning on promises to end a deep recession and root out corruption rampant under his predecessor, Carlos Menem.

May 29, 2000: Argentina announces nearly US$1 billion in budget cuts, hoping to inspire confidence in the lifeless economy. About 20,000 people march in protest two days later.

Oct. 6: Vice President Carlos Alvarez resigns, alleging De la Rua is unwilling to deal with a massive bribery scandal in the Senate. Worries Argentina might default on its debt intensify as the ruling coalition starts to unravel.

Dec. 18: Government announces US$40 billion aid package led by International Monetary Fund. Markets post strong rally.

March 2001: With markets starting to panic again as the economy shows no sign of recovery, two economy ministers quit in just three weeks.

Domingo Cavallo, hailed for conquering hyperinflation a decade before, takes over the portfolio, promising strong growth by year-end without hated spending cuts.

July 10: Cavallo launches plan to avoid a debt default or devaluation by immediately balancing the federal budget by cutting several billion dollars in spending. Argentine sovereign bond prices plummet as investors doubt its chances of success.

Oct. 14: Opposition Peronist Party deals government crushing defeat in midterm legislative elections, becoming the biggest force in both chambers.

Dec. 19: Worst riots and looting in a decade break out to protest poverty and spending cuts amid demands that De la Rua and Cavallo resign. Government declares state of siege.

Dec. 20: Cavallo resigns in the early hours of the morning. Later in the day, after the opposition turns down his offer to form a coalition government, De la Rua also offers his resignation as the death toll from ongoing riots reaches 27.

Dec. 23: Congress designates Peronist Adolfo Rodriguez Saa, governor of the Andean province of San Luis, as the new interim president. Saa says Argentina will suspend payments on the foreign debt and dismisses devaluation and dollarization. A new currency, alongside the peso and US dollar, is planned.

Dec. 28: A new round of protests erupts in anger over Rodriguez Saa's appointment of officials widely seen as corrupt and his decision to maintain unpopular banking curbs. A dozen police are injured as demonstrators loot Congress.

Dec. 30: Rodriguez Saa calls an emergency meeting of power brokers from his own party, which is snubbed by some governors reportedly worried he is trying to extend his term in power. Citing a lack of support within his own party, Rodriguez Saa resigns.

Jan. 2, 2002: Peronist Eduardo Duhalde, a former Buenos Aires province governor and vice president under Carlos Menem, is sworn in as Argentina's president. His term ends in December of next year.

Jan. 6: In an announcement, Duhalde cuts peso free from decade-old currency peg, devaluing the currency by nearly 30 percent in a bid to end a four-year recession. Peso pegged at 1.40 to the dollar for exports and official transactions, but peso to free-float for all other transactions by the public.

Jan. 10: Government deepens harsh banking restrictions, converting a large chunk of Argentines' savings into fixed term deposits and putting them out of reach for at least a year.

Jan. 11: Government lifts a three-week ban on foreign exchange transactions, effectively implementing its two-tier devaluation. Newly floating peso opens at buy rate of 1.60 and a sell rate of 1.70 to the dollar. The sale of dollars at 1.70 rate equals a 41.7 percent devaluation from the long-standing one-to-one rate.

Source: Reuters
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