September 10, 2008 / 8:57 PM / 12 years ago

Argentina peso hits three-month low, bonds slide

(Adds bonds, stocks)

BUENOS AIRES, Sept 10 (Reuters) - Argentina’s peso fell on Wednesday to its weakest level against the dollar in three months, while bonds slipped as investors ditched riskier emerging market assets.

The peso took a beating as the U.S. currency continued to firm against counterparts around the globe, with low foreign currency inflows from exporters exacerbating the peso’s slide.

It closed down 0.57 percent to 3.0725/3.0750 per dollar ARS=RASL, in formal trade between banks, its weakest close since June 2.

In informal trade between foreign exchange houses, as measured by Reuters, the peso fell 1.52 percent to 3.1250/3.1300 per dollar ARSB=, its lowest level since June 17.

On world markets, the dollar .DXY scaled a one-year peak against the euro, its rise fueled by retreating crude oil prices and by U.S. investors cashing out of emerging markets positions and bringing their money home.

“Investors still prefer having foreign currency positions, and covering those positions is continuing to drive up the dollar,” said one Argentine trader.

Argentina’s central bank intervenes regularly in the foreign exchange market and traders said they expected it to step in to level the market.

On the local debt market, Argentine bonds <AR/BONOS> closed down for a second straight session, falling by 1.1 percent on average due to greater risk aversion amid fears over the health of the U.S. economy, traders said.

Among the day’s biggest losers was the dollar-denominated Boden bond, maturing in 2014, which slumped 4.1 percent.

However, Argentine stocks closed with a gain of 0.61 percent, ending a run of four losses.

The benchmark MerVal .MERV index closed up 0.61 percent at 1,604.84 points, lifted by energy-related stocks, which rose despite falling crude prices on Wednesday due to a surprise OPEC decision to cut production.

Gainers were led by Tenaris TENA.BA (TS.N), the world’s top producer of seamless steel tubes for the energy industry, up 4.96 percent to 67.7 pesos per share.

Trade volume on the broad market was a meager $18 million. Of active shares, 36 retreated, 19 advanced, and 14 were unchanged. (Reporting by Walter Bianchi; Writing by Helen Popper; Editing by Leslie Adler)

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