Financial Times

Tuesday, October 9, 2012
By Jude Webber

Cristina Fernández, Argentina’s president (pictured), maintains her government has not “clamped” the dollar, despite imposing a rash of restrictions on greenback purchases in recent months.

Try telling that to the northern province of Chaco. It says it was forced to settle a dollar-denominated bond in pesos because it could not get hold of the dollars to meet the $260,000 payment. Argentine bonds fell 1.3 per cent on Tuesday, the first trading day since Chaco’s weekend announcement (Monday was a holiday in Argentina).

Technically, that could be classed as a selective default – it would be in the case of sovereign debt, Moody’s says – and, as such, sets a worrying precedent in a country whose name remains inextricably linked with the biggest sovereign default in history. Is this, investors could be forgiven for wondering, the start of a pesification of dollar debt in Argentina a decade after its default on nearly $100bn?

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