Argentine peso sinks; stocks, bonds extend losses

martes 7 de octubre de 2008 17:31 ART

(Updates to close, adds bonds)

BUENOS AIRES Oct 7 (Reuters) - Argentina's peso sank to its weakest in more than 5-1/2 years on Tuesday despite central bank vows to support the currency, while stocks and bonds extended Monday's heavy losses.

In informal trade between foreign exchange houses, as measured by Reuters, the peso slid 2.39 percent to 3.315/3.320 per U.S. dollar ARSB=, its lowest point since January 2003. It has slipped 4.65 percent so far this year.

Traders said the demand for dollars was motivated by a flight to the comparative safety of the U.S. currency.

Argentines, accustomed to periodic financial crises, traditionally seek dollars when there are signs of trouble, and the financial crisis in the United States has not dented the perception of the dollar as a safe haven.

"The market is totally demanding dollars and the low liquidity of dollars is making the price (of dollars) rise," said a foreign exchange trader, who asked not to be named.

"People don't want any more risks," said another trader.

In formal trade between banks ARS=RASL the peso closed down 0.63 percent at 3.215/3.2175 per dollar. The central bank intervenes in the interbank market to avoid abrupt movements in the value of the currency.

Central Bank President Martin Redrado said on Tuesday his central mission was to defend demand for pesos and sustain that demand through different policies.   Continuación...