Argentine risk rises on farm strike, peso off

lunes 31 de marzo de 2008 13:59 ART

BUENOS AIRES, March 31 (Reuters) - Argentine bond prices slipped on Monday as a farm protest dragged on, causing risk aversion among investors, but the peso currency was stable thanks to central bank intervention.

Government debt prices <AR/BONOS> fell 1.0 percent on average, early in trade. The dollar-denominated Bonar VII was down 1.31 percent in over-the-counter trade.

"Government debt prices were the most affected by the agricultural conflict," consulting group Portfolio Personal in a report.

A farm strike over a tax hike on soy exports entered a nineteenth day, halting grain shipments abroad, emptying meat counters and provoking a domestic political crisis.

Argentine bonds risk spread over U.S. Treasuries, as measured by investment bank JP Morgan, widened 14 basic points to 573 basic points, the EMBI+ showed at 1420 GMT.

Suspicions of official inflation figures manipulation, which are used to update over 40 percent of government debt prices, have made investors adverse to Argentine bonds.

On top of this, last week, JP Morgan recommended selling Argentine bonds due to the farm protest.

Against the dollar, the peso depreciated 0.08 percent to 3.1650/3.1675 ARS=RASL in formal interbank trade, where the central bank was selling dollars to compensate for the lack of dollars traditionally coming from agricultural exports.

With foreign reserves at historic levels of more than $50 billion the central bank has plenty of leeway to control the foreign exchange market, analysts have said.   Continuación...