Thousands of sweat-soaked Argentines stood in long lines on 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 hot, narrow streets of Buenos Aires' financial district were blocked to honking vehicular traffic by lines at foreign exchanges wrapping around entire city blocks, even though the peso held steady and sold near its recent levels of 2.0 to the dollar.
The Central Bank stood ready to intervene, but there was some respite for a country which in recent weeks has both devalued its peso currency and defaulted on $141-billion in public debt in a last-ditch effort to pull out of a deep financial crisis that has neared total collapse.
Meanwhile, Economy Minister Jorge Remes Lenicov traveled to Washington on Monday to seek assistance from the International Monetary Fund, but officials played down hopes of desperately needed aid for the crippled banks of Latin America's No. 3 economy.
Ordinary Argentines were taking no chances with their dwindling cash as many still remember 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 chaotic 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.
The peso weakened to 2.30 in early trade, but recovered to 1.95, stronger than the rate seen before trade was suspended for a week to prepare for the total flotation.
Markets and investors worldwide 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 the decade-long 1-to-1 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 country's 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.
From Mar del Plata on the Atlantic to Mendoza in the Andes, savers bashed pots and pans outside banks in noisy protests, mobilizing what was once Latin America's most stable middle class.
Thousands of unemployed blocked key routes into Buenos Aires, demanding jobs in the kind of disruption that has become routine in a country that has swiftly turned from a model of economic and political reform in the 1990s to a tinderbox.
Government officials are keenly aware that hyperinflation could easily spark new riots, like those in December which brought the resignation of President Fernando de la Rua as well as his immediate successor chosen by Congress.
Housewives in La Pampa province called on shoppers to "boycott speculative businesses" which they said were raising prices of goods like flour and pasta as much as 30 per cent.
Shopkeepers' association leader Ruben Manusovich called a 48-hour protest against mark-ups, saying: "We won't accept price rises imposed by wholesalers watching the dollar."
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 already critical in the state-run health service. Health workers in Buenos Aires province, the nation's industrial and agricultural heartland, 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.
"In the three biggest psychiatric hospitals, there is no bread, they get watered-down milk without sugar and patients are having nutrition problems," he said.
Unions demanding pay rises could add to inflation pressures. Rodolfo Daer, head of the largest General Workers' Confederation, said wages were being "pulverized."
"If the domestic market keeps being strangled and losing purchasing power, there will be no recovery in employment or industry," he told reporters.
That could open up another front for President Eduardo Duhalde, from the Peronist Party which is traditionally close to unions. He pleased the IMF by devaluing but has not yet convinced them to put up cash to shore up banks and the peso.
Local bankers consider him a throwback to Peronism's populist roots who is unlikely to cure the overspending behind Argentina's default.
Remes Lenicov is unlikely to return from the IMF, U.S. Treasury Department and World Bank with a suitcase of cash.
"Nobody should expect us to come back with anything in our pockets," said government spokesman Eduardo Amadeo. "All we'll have is the opening of negotiations."
"Given the range of issues that must still be resolved, we do not believe an IMF agreement is the most likely scenario in the short term," said Credit Suisse First Boston.
So far there has been little more than encouragement. At a meeting over the weekend, the Group of Seven industrialized nations praised Argentina's "steps in the right direction," but referred it back to the IMF.