Argentine peso hits five-month low on farm strike
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BUENOS AIRES, March 26 (Reuters) - The Argentine peso slumped to a five-month low on Wednesday as a two-week-old strike by farmers slashed dollar inflows from agricultural exports.
Bonds slid on perceptions of greater political risk in Argentina due to the strike, but stocks shrugged off the news.
The strike to protest against a government tax hike has disrupted grains and other exports, causing some companies to declare force majeure on Argentine soy shipments.
Force majeure is a contract clause that allows a supplier to forego an obligation to supply in extreme unforeseen circumstance.
In informal trade between foreign exchange houses, as measured by Reuters, the Argentine peso ARSB= slipped 0.47 percent to 3.1900/3.1925 pesos per dollar, closing at its weakest point since Oct. 31.
The peso ARS=RASL also depreciated 0.24 percent to end at 3.1675/3.1700 per dollar in formal interbank trade.
"Amid an agitated day due to news about the farmers strike, the exchange market was clearly buying and forced the Central Bank to sell dollars at 3.17 (pesos) to slow down the weakening of the currency," said Fernando Izzo, an analyst at ABC Market Exchange.
In recent years, windfall profit from high-priced soy and other grains exports has spurred a flood of dollars into Argentina; the Central Bank usually buys up dollars to keep the peso weak, keeping the country's exports competitive. Continuación...