BY KEVIN G. HALL
 Herald World Staff

 BUENOS AIRES -- The Argentine government signaled on Wednesday that it would soon shift the country's controversial dual-exchange rate to a free-floating peso whose value is set by international currency markets.

 The Ministry of Economy indicated it would free the peso, perhaps within two weeks. That depends, however, on promises of new lending from the International Monetary Fund, a promise needed to bolster Argentina's battered image and prevent the peso from a steep fall when it begins trading freely.

 With the announcement, Argentines raced on Wednesday to withdraw bank deposits and swap their pesos for U.S. dollars. The news also sent the stock market's
 MerVal index shooting up 6.85 percent, while the peso's value plummeted to 2.05 to the dollar in open market trade.

 NEW ASSAULT

 The news also prompted thousands of Argentines to line up at banks and currency exchange houses while others took to the streets to protest what many see as a new assault on a population hard-hit by recession and debt.

 The decision marks a significant step toward the free-market policies favored by the Bush administration and the IMF, without whose help Argentina cannot hope to
 restore its economy.

 Facing economic collapse last month, Argentina was forced to close its banks, provoking riots, a political crisis and a dizzying series of presidential resignations.
 President Eduardo Duhalde, the leader who finally emerged, said Argentina would steer a more independent course in foreign and economic policy.

 FREE-MARKET POLICIES

 Duhalde also suggested at the time that Washington and the IMF were largely to blame for the crisis because the free-market policies they promoted were responsible for Argentina's plight.

 But during a visit to Washington this week, Argentina's new foreign minister, Carlos Ruckauf, said U.S. and IMF criticism of how Argentine officials mishandled their
 economy was valid. He vowed that Argentina would present a ``sustainable'' economic recovery program, repeating the word used frequently by President Bush, Treasury Secretary Paul O'Neill and directors of the IMF.

 ``A sick man only gets well when he knows he is sick,'' Ruckauf told Argentine reporters in Washington. In Sunday editions of the Italian newspaper Corriere della Sera, he was quoted as saying that ``Argentina has told the IMF many lies, and now we are telling the crude truth.''

 The abrupt change in tone by the Argentine government came as the IMF's top official for Latin America, Claudio Loser, arrived in Buenos Aires on Wednesday for a two-day visit, prompting speculation that the final touches are being put on an economic program that has the support of international lenders.

 As if to reinforce the government's new attitude, a spokesman for Duhalde insisted that Argentina intends to retain close ties to the United States rather than trying to
 forge a more independent course.

 This report was supplemented with Herald wire services.

                                    © 2002