BUENOS AIRES (Reuters) - Calling for a cross-party government, populist Eduardo Duhalde took office on Wednesday as Argentina's fifth president in two weeks and began plotting a possible devaluation to pull the economy out of a recession that sparked bloody riots.
After Congress chose Duhalde on Tuesday to lead Argentina until 2003, the Peronist Party powerbroker vowed to scrap ``an economic model that has brought desperation to a vast majority'' -- the currency system created by his own party a decade ago.
A Duhalde adviser told Reuters that could mean a 30 to 40 percent devaluation of the peso from the one-to-one peg to the dollar, which has turned Argentina into a virtual dollar zone where most home loans and major contracts are in greenbacks.
Devaluation could bankrupt millions since they would need more pesos, in which wages are paid, to cancel dollar debts. But it is also seen as possibly the only way to end a four-year slump which has impoverished a country with the highest incomes in Latin America and pushed up unemployment to 18.3 percent.
Economic instability, plus a freeze on bank savings for the past month which infuriated ordinary Argentines, set off looting and rioting which forced out President Fernando de la Rua -- who was due to rule until 2003 -- and killed 27 people.
Duhalde made no policy comments at a brief ceremony at which he took office. But he told one paper: ``Flotation is one of the five alternatives economists have put forth, but even those that defended it are not so convinced.'' Devaluation would make Argentine exports cheaper and more competitive abroad.
The Buenos Aires Stock Exchange's Merval Index gained 9.58 percent on Wednesday as investors snapped up blue-chip stocks with pesos that may soon buy a lot less.
The 60-year-old former vice president and former governor of Buenos Aires province is expected to present on Friday his economic plan, which will also have to deal with the moratorium declared on part of the 132 billion public debt by Adolfo Rodriguez Saa, who was president for a week before quitting.