March 27, 2008 / 3:55 PM / 12 years ago

Argentine peso weakens further on farm strike

BUENOS AIRES, March 27 (Reuters) - The Argentine peso slid to fresh five-month lows on Thursday in informal trade as a farm strike dried up the flow of dollars, but central bank intervention kept it from falling on the formal interbank market.

In informal trade between foreign exchange houses, the peso ARSB=, as measured by Reuters, weakened 0.16 percent to 3.1950/3.1975 per dollar, a level not seen since October.

However, the peso strengthened 0.08 percent to 3.1650/3.1675 ARS=RASL in formal interbank trade where the central bank was selling dollars.

“Dollar demand remains present but the traditional offer from (agricultural) exports is nil. If it were not for the central bank, the (peso’s fall) would be much stronger,” said a trader at ABC Market Exchange.

A deadlock between the government and farmers over a tax hike on soy exports moved into a third week as neither side showed signs of backing off.

Farmers have stopped moving goods to market and with grains and livestock exchanges frozen, traditional agricultural dollar inflows have been cut.

Analysts said the central bank has plenty of room to maneuver and control the peso, since foreign reserves are at historic levels of more than $50 billion.

The strike’s effect on stocks was minimal in a market dictated by oil-related firms rather that agricultural companies. Trade was choppy, opening up and then plunging before picking up again.

The benchmark MerVal .MERV index was up 0.49 percent to 2,090 points in early afternoon trade.

On the broad market, volume was low at around $4.8 million. (Reporting by Jorge Otaola; Writing by Gaspard Sebag; Editing by James Dalgleish)

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