February 3, 2009 / 9:07 PM / 11 years ago

Argentine peso slides to seven-year low; stocks rise

BUENOS AIRES, Feb 3 (Reuters) - Argentina’s peso currency fell to a seven-year low in formal trade on Tuesday and bonds slipped, while stocks rose.

Argentina’s central bank has allowed the peso to fall gradually against the dollar in recent weeks as the country tries to keep its export sector competitive with its top trading partner, neighboring Brazil.

The peso shed 0.21 percent to close at 3.4975/3.5 per dollar ARS=RASL in formal trade between banks.

In formal trade between foreign exchange houses, as measured by Reuters, the peso fell 0.14 percent to 3.53/3.535 per dollar ARSB=, its lowest level since December 2002.

“The peso in the formal market weakened slowly in light trade and the Central Bank did little to break its slide,” said Fernando Izzo, an analyst at ABC Mercado de Cambios.

The Argentine central bank intervenes regularly in the foreign exchange market, maintaining the peso at levels it considers best suited to keep the economy competitive.

Argentina, an agricultural powerhouse, is grappling with a slowing economy and lower commodity prices caused by the world economic slowdown.

Argentine stocks rose, lifted by Wall Street, where U.S. stocks gained on news a group of Republican senators offered a $445 billion alternative plan to boost the country’s ailing economy.

The benchmark MerVal index .MERV advanced 1.37 percent to close at 1,072.34, led by gains in Buenos Aires-listed shares of Brazilian state-owned oil company Petrobras <APBR.BA and financial group Grupo Financiero Galicia GFG.BA.

“The MerVal followed Wall Street higher, but with some selectivity. Not all of the sectors rose,” said Claudio Szlaien, an analyst at Marlon Recursos Financieros.

Petrobras climbed 4.2 percent to 48 pesos and Galicia gained 2.23 percent to 0.735 pesos.

Argentine government bonds traded locally <AR/BONOS> fell in light trade as investors pocketed profits from recent gains.

Bonds fell on average 0.8 percent, led by a 3 percent drop in Boden 2014 paper.

Reporting by Walter Bianchi and Jorge Otaola; Writing by Kevin Gray; Editing by Dan Grebler

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