* La Nacion daily says Chaco province can't get dollars
* Government currency controls dampen investment
BUENOS AIRES Oct 6 Chaco province in northern
Argentina surprised the local capital markets this week when it
made more than $263,000 dollar-denominated bond service payments
in local pesos rather than in U.S. currency, La Nacion newspaper
reported on Saturday.
The government of Argentina has cracked down on access to
dollars this year in a bid to halt capital flight as the local
currency depreciates against the dollar.
The Chaco dollar-denominated bonds were issued in 2006 and
come due in 2015 and 2023. But the debt payments could not be
made in the designated currency because the province could not
get its hands on dollars, La Nacion said, citing market sources.
"This leaves the door open to the possible forced
pesification of other securities denominated in foreign
currency," La Nacion said.
Argentina is a major world grains supplier. Rising soy, corn
and wheat prices have helped the South American country recover
from a severe 2001-2002 financial crisis.
But the economy has cooled quickly this year due to sluggish
global growth, high inflation, reduced grains output caused by a
December-January drought, and sinking business confidence as
the de facto ban on dollar buying dampens investment and hurts