June 7 (Bloomberg) -- Argentine bonds plunged after a legislator from President Cristina Fernandez de Kirchner’s coalition said he’d propose legislation that would force people to carry out business transactions in pesos instead of dollars.
Yields on Argentine law dollar bonds due in 2015, known as Bodens, rose 107 basis points, or 1.07 percentage points, to 17.77 percent at 5:39 p.m. Buenos Aires time. The price fell 2.14 cents to 75.21 cents on the dollar, according to data compiled by Bloomberg. The selloff snapped a three-day rebound in the bonds that had driven yields down from a two-year high.
Congressman Edgardo Depetri unveiled the legislation proposal a day after Fernandez said at a rally that she will convert her dollar savings into pesos and urged Argentines to do the same in a bid to shore up the currency. The president has tightened controls in the foreign exchange market since being re-elected in October as she tries to stem record capital outflows that are draining the country’s foreign reserves.
Interior Commerce Minister Guillermo Moreno told currency dealers last week to reduce the exchange rate for dollars in the illegal local market to 5.10 pesos per dollar from 5.95. In the official market, the peso climbed 0.2 percent today to 4.4840 per dollar.
Depetri said in an e-mailed statement today that he plans to propose a bill that would require contracts, including real estate sales and some rental contracts, be carried out in pesos. Argentine property is normally listed and sold in U.S. dollars.
“All those accords or contracts aimed to change the ownership of goods will only be valid if they are done in the legal national currency,” Depetri said in the statement. “What we want is to recover the culture of our own currency as a unit of value to pay obligations within our country.”
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