MercoPress. South Atlantic News Agency

Argentine industrial sector wants lower Peso to prop exports

Argentina's industrial sector is demanding that the government of President Cristina Fernandez de Kirchner lower the value of the peso to improve exports in a move to overcome the economic crisis.

Pablo Challú, head of the UIPBA Buenos Aires province Industrial Union said local manufacturers have been affected by increasing costs and the devaluation of the Brazilian real. Both factors have changed the regional terms of trade and adversely affected Argentina's competitiveness, he said. Argentina has a floating exchange rate, but the Central Bank normally intervenes in the monetary market to stabilize the value of the peso. Last week, the national currency lost three cents to the dollar. Business leaders have said that a dollar should be worth 3.50 to 4 pesos. Challú meanwhile said the government's plan to boost to promote production "will help certain sectors, but is insufficient." He added: "it's very important that the government adopted initiatives to face the slowdown in global demand, this means we don't have an inactive government." Nevertheless, he said the government's 70-billion-peso public works plan to fight the crisis, announced on Tuesday by President Cristina Fernández de Kirchner, is insufficient. "We still lack measures to overcome the crisis" Challú told reporters during a radio interview. Apart from the high value of the peso, the head of UIPBA said there are two other problems, which concern local businessmen. "The industrial sector has a problem of confidence, because many people believe the government will not be able to afford its debt," said Challú. Argentina's debt obligations surge next year to some 20 billion dollars and a global credit crunch has only worsened its access to international capital markets, already limited by lawsuits from creditors who rejected its 2005 restructuring. Second, "demand has plummeted as a result of the international situation," Challú said. "The government announced measures that will allow saving certain companies and reactivating the specific demands; however, given the current situation, more measures are needed," Challú added.