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Argentina central banker's resignation amid IMF talks hits peso

Other News Materials 26 September 2018 02:57
Argentina’s central bank governor resigned on Tuesday in the midst of negotiations with the International Monetary Fund, dealing a blow to President Mauricio Macri’s efforts to shore up investor confidence and sending the peso sliding.
Argentina central banker's resignation amid IMF talks hits peso

Argentina’s central bank governor resigned on Tuesday in the midst of negotiations with the International Monetary Fund, dealing a blow to President Mauricio Macri’s efforts to shore up investor confidence and sending the peso sliding, Reuters reports.

Luis Caputo’s surprise resignation after just three months in the role came as a nationwide strike by unions, called to protest Macri’s handling of the economy, shuttered public transit and ports across the country.

Former Economic Policy Secretary Guido Sandleris, who holds a doctorate in economics from Columbia University, was named as Caputo’s replacement, a statement from the presidency said.

Argentina has been at the center of emerging market jitters in recent months. It has seen its peso currency lose more than 50 percent of its value so far this year amid concerns that a recession could impact the government’s ability to pay its foreign debts.

Caputo, a former finance minister whose appointment three months ago was supposed to restore investors’ faith in monetary policy, is the second Argentine central bank president to resign this year. A hike in central bank benchmark interest rates to 60 percent has failed to stem a slide in the peso.

His departure came a day after Macri said that a renegotiation of Argentina’s $50 billion standby agreement with the IMF was nearly concluded and would lay out a clear direction in monetary policy. Local media have reported the government is considering introducing a trading band for the peso.

“This resignation is due to personal reasons, with the conviction that a new agreement with the International Monetary Fund will reestablish confidence in the fiscal, financial, monetary and exchange rate situation,” the central bank said in a statement.

The peso ARS=RASL recovered much of its early losses after the central bank intervened in the currency futures market, closing down 3 percent at 38.50 to the dollar, traders said. It had slipped nearly 7 percent in the morning, with trade thin due to the national strike.

The Merval stock index .MERV rose more than 2 percent, led by energy stocks that price their sales in dollars.

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