Argentine peso sinks as investors skirt controls

Tue Mar 27, 2012 10:14pm GMT

* Dollar demand rises as government tightens controls

* Firms, institutional investors buy assets traded abroad

* Gap between official peso and black-market rates growing

By Jorge Otaola

BUENOS AIRES, March 27 (Reuters) - Argentina's peso sank to a record low on Tuesday in a market used to skirt tightened currency controls as companies and investors upset over combative government policies seek refuge in greenbacks, traders said.

The peso slid to 5.25 per dollar in the so-called blue-chip swap market, which reflects the implied exchange rate used to buy Argentine shares or bonds that can be sold for dollars overseas. The official interbank rate was 4.3725.

Center-left President Cristina Fernandez, after winning re-election in October, imposed curbs on foreign currency purchases to stem capital flight, fueling a growing gap between the interbank rate and the black market rate.

Her government has also effectively limited the transfer of profits abroad and created new import controls, complicating operations for firms involved in foreign trade.

The blue-chip swap rate has sunk 8.6 percent since the start of the year, while the parallel or black-market rate in Argentina shed about 4 percent to 4.92 per dollar. The interbank peso has weakened just 1.5 percent in the same period.   Continued...

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