BUENOS AIRES: Locally traded Argentine sovereign bonds fell an average 1.3 percent on Tuesday, the first day of trading since Chaco province said over the weekend that it would pay some of its dollar-denominated obligations in local pesos.
The national government of Argentina has tried to stem capital flight this year by cracking down on access to US dollars. The new controls have limited the ability of borrowers to repay dollar-denominated debt in dollars.
The selloff was led by the country's Bonar 2017 bonds, which slipped 3.2 percent.
Monday was a holiday in Argentina and markets were closed.
Chaco's payment last week of about $260,000 in pesos sparked fear that other Argentine borrowers may start repaying their US dollar debts in pesos as well, in effect foisting a weaker currency on investors who had contracted to receive dollars.
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