Argentine peso hits new low; bonds, stocks inch up

miércoles 3 de diciembre de 2008 18:59 ARST
 

(Updates peso to close, adds stocks and bonds)

BUENOS AIRES Dec 3 (Reuters) - Argentina's peso currency extended its losses against the U.S. dollar on Wednesday on persistent demand for safe-haven greenbacks, while stocks and bonds rose for a second straight session in light trade.

Global recession fears are driving U.S. dollar purchases by Argentine firms, pushing the local currency to levels not seen since a sharp devaluation in 2002 at the height of a devastating economic and political crisis.

Foreign exchange traders in Buenos Aires say the central bank is allowing the peso to weaken in order to bolster Argentine exports, moderating dollar sales that have put the brakes on the peso's slide in recent months.

"The big influence continues to be demand for dollars from private banks and companies ... with reduced dollar sales by exporters who are only selling their products when they need to," said Fernando Izzo, an analyst at ABC Mercado de Cambios.

Exporters of soy, corn and wheat are a major source of dollars in Argentina's money market and low global prices have brought activity to a near standstill in local grains markets.

In interbank trade, the peso was down 0.37 percent against the U.S. currency at 3.4075/3.41 per dollar ARS=RASL, a low not seen since January 2002, when Argentina was gripped by one of its worst economic and political crises.

So far this year, Argentina's formal peso has depreciated 7.6 percent against the dollar.

But Argentine industrial leaders have been calling for a weaker peso to allow them to preserve their competitiveness compared with neighboring Brazil, Argentina's top export market. Brazil's real currency BRBY has shed 28.1 percent since the start of the year.   Continuación...