June 9, 2010 / 8:10 PM / 10 years ago

Argentine peso dips to record low in informal trade

* Peso weakens on risk aversion, cenbank controls

* Spread between informal and formal markets widens (Adds details on controls, quote, price on formal market)

BUENOS AIRES, June 9 (Reuters) - Argentina’s peso closed at a historic low on Wednesday on the informal market, pressured by global risk aversion and tightened central bank controls on U.S. dollar purchases, traders said.

The peso ARSB= closed 0.19 percent weaker at 4.005/4.01 per U.S. dollar, according to Reuters data, surpassing lows reached during a severe economic crisis in 2002. Volume was modest.

Argentina’s currency has slowly depreciated in nominal terms over the last two years with the backing of the central bank, which intervenes almost daily in the formal interbank market, where the peso closed unchanged at 3.915/3.9175 ARS=RASL.

This week, the central bank started requiring that purchases exceeding $20,000 per month be made through bank transfers, rather than in cash, and that buyers of $250,000 or more per year prove they have declared their assets to the tax agency.

Also, as of Friday, the central bank will reduce operations whereby Argentines buy bonds and stocks that trade abroad and immediately sell them to effectively exchange their pesos for dollars without passing through the foreign-exchange market.

The exchange rate implicit in these operations has risen to around 4.10 per dollar, according to local media reports.

“These controls do not help,” said one currency trader, adding that demand for dollars rose due to a broader drive to seek refuge in the U.S. currency amid global market volatility tied to the European debt crisis.

Officials said the new controls target money-laundering and tax evasion. But analysts and traders said they will also likely cool demand for dollars on the formal market and reduce the central bank’s need to sell its foreign reserves to prop up the peso.

The central bank’s reserves have become increasingly important since the government decided to use them to pay debt this year, as state spending rises ahead of an October 2011 presidential election.

One market player speculated the controls are intended to reduce downward pressure on the peso so that when the government has to buy dollars next year to pay its debts, it will not have to pay too high a price for them.

Argentina has offered creditors new bonds and, in some cases, cash in exchange for up to $18.3 billion in nonperforming bonds that date back to a 2001-02 default.

The government hopes to return to global credit markets once the swap finishes, but global risk aversion has pushed up the price of issuing debt and the government may have to continue relying on alternative sources of financing.

Central bank officials said they simply aim to crack down on money-laundering and tax cheats after investigations revealed that people with very few assets of their own were being used to make million-dollar deals.

“This is being done in the framework of recommendations the FATF has made about money-laundering and terrorism financing in Argentina,” Central Bank Director Arnaldo Bocco told local radio, referring to the Financial Action Task Force created by the Group of Seven powerful nations in 1989. (Reporting by Walter Bianchi and Hilary Burke)

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