Feature: Argentines transfixed as peso dives against dollar

BUENOS AIRES, May 10 (Xinhua) -- Argentines are closely watching their national currency after it took a sudden dive to land at 23.30 to the U.S. dollar, sending President Mauricio Macri's economic team scrambling to halt the peso's tumble.

Argentines are concerned about the effects the exchange rate may have on their savings, on the price of utilities and on inflation, already Latin America's second highest.

"I'm worried that the dollar's rise will cause prices to go up, since that's what we are used to seeing," Buenos Aires resident and general practitioner Dariana Fajardo, 27, told Xinhua.

"The cost of living is on the rise, the basic basket too, as are the prices of necessities, as well as medicines," said Fajardo.

The peso fell about 11 percent against the dollar at the start of May, leading Argentina's central bank (BCRA) to hike interest rates to 40 percent, in a bid to make the currency more attractive to investors and savers.

It also made some 1.5 billion dollars available on the market by lowering foreign exchange holdings at banks and financial institutions from 30 percent to 10 percent.

A volatile peso is likely to make Argentinians lose faith in their national currency and put their savings in dollars, said Fajardo.

"If you have savings in pesos, when the dollar rises, the peso falls, and it isn't going to provide for future purchases; so we end up having to save in dollars so our savings don't devalue," Fajardo said.

Martina Cruz, a teacher in her 40s, echoed those concerns, saying the peso's decline erodes purchasing power while at the same time sparking rising inflation. Still, she said she was hoping for the best.

"Luckily, Argentina is a country with national production and that's something that should help. Should the prices of goods go up, I hope neither public healthcare nor education will be affected," said Cruz.

On Thursday, Argentina's government announced the International Monetary Fund (IMF) agreed to its request for a loan, though the exact amount and conditions have yet to be established.

Like many Argentines, social communications expert Emilio Padilla is concerned the lending agency may impose harsh austerity measures, as it has in the past, as part of its lending package.

Padilla said those conditions typically entail "social drawbacks," including a "fewer work benefits, lowering subsidies and other kinds of formulas that impact the most vulnerable."

The government has tried to allay those fears by pointing out that the IMF offers better-than-market rates and terms that make loans "cheaper."

Publicist Daries Padron, 27, said the devaluation coupled with economic measures that led to higher utility prices and the IMF loan negotiations have put Argentinians on high alert.

"It generates a state of alert among the population because you don't know how high everything is going to go," said Padron.

"It makes me wonder whether I should buy a product or not, how high air tickets will go, or if it is better to invest money in physical assets or buy dollars," Padron told Xinhua. Enditem