March 27, 2008 / 4:30 PM / 12 years ago

Argentine peso, bonds slip as farm strike drags on

(Updates with closing prices)

BUENOS AIRES, March 27 (Reuters) - Argentine bonds slipped in cautious trade and the peso slid to a fresh five-month low in informal trade on Thursday, as a prolonged protest by farmers dried up dollar flows and worried investors.

Stocks rose slightly in thin trade and the central bank sold dollars on the formal interbank foreign exchange market, where it regularly intervenes, lifting the peso after three straight sessions of losses.

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

The peso strengthened by the same amount to 3.1625/3.1650 ARS=RASL in formal interbank trade.

“Dollar demand remains present, but the traditional offer from (agricultural) exports is nil,” said a trader at ABC Market Exchange.

A deadlock between the government and farmers over a tax hike on soy exports entered its third week on Thursday.

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 hovering near a historic high of more than $50 billion.

Government debt prices <AR/BONOS> fell 0.9 percent on average, but volume was low as investors exercised caution due to the farm protest and jitters over the slowing U.S. economy. The losers were led by the dollar-denominated Boden 2014 bond, which shed 1.7 percent.

Argentine stocks closed with slight gains as wary investors awaited a resolution of the farmers’ strike.

The benchmark MerVal .MERV index closed up 0.18 percent at 2,083.66 points.

Among the session’s biggest gainers was telecommunications company Telecom Argentina TEC2.BA, which rose 3.89 percent to 13.35 pesos per share.

On the broad market, volume was a modest $28.7 million. Of the active issues, 28 advanced, 26 declined and 14 ended unchanged. (Reporting by Jorge Otaola and Walter Bianchi; Writing by Gaspard Sebag; Editing by Jonathan Oatis)

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