On January 3, 2002, President Duhalde—the fifth president in three weeks—
confirmed the debt moratorium (as well as the intention to negotiate with private creditors)
and announced the end of the convertibility regime. Three days later, Congress effectively
replaced the convertibility regime with a dual exchange rate system based on an official
exchange rate of Arg$1.4 per U.S. dollar for public sector and most trade-related transactions
(except luxury imports); all other transactions would take place at prevailing market rates.38
At the same time, the monthly deposit withdrawal limit was raised to 1,500 pesos (from its
previous limit of Arg$1,000), coupled with the freezing of term-deposits (corralon); dollar
deposits would remain frozen until at least 2003. To dampen inflationary pressures, prices of
privatized utilities (gas, electricity, telephones and water) were frozen indefinitely. Congress
also approved an emergency law that severely curtailed creditors’ rights.