Argentine central bank chief resigns amid economic turmoil

Published Wed, Oct 1, 2014 · 11:01 PM
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[BUENOS AIRES] Argentina's central bank governor resigned on Wednesday, the president's office said, as the country grapples with an economic slowdown, a debt default and a damaging row with the United States.

Juan Carlos Fabrega's decision to quit after less than a year in the post comes a day after an emotional President Cristina Kirchner alleged in a televised address that domestic and US interests were pushing to devalue the peso, topple her center-left government - and even kill her.

Argentina's economic woes have been piling up in recent months, with annual inflation estimated at nearly 40 per cent, the value of the peso tumbling and a bitter court dispute with two hedge fund creditors forcing the country to default on its debt for the second time in 13 years.

Underlining the economic morass, the Buenos Aires stock market fell 8.22 per cent to close at 11,516.28 points after Ms Kirchner's address and amid speculation that Mr Fabrega was on his way out.

Latin America's third-largest economy is struggling to get back on track with deals to restructure the debt it defaulted on during its 2001 crisis.

A US court has ordered it to halt interest payments to creditors who agreed to take steep losses until it settles a US$1.3 billion dispute with the "holdout" hedge funds refusing to accept a write-down.

The row has put a spotlight on the central bank's shrinking reserves, which fell from US$50 billion in 2011 to US$28 billion today.

Mr Fabrega, a long-time central bank official, had held the highly sensitive top job for less than a year.

He was in the post when Argentina devalued the peso by 18 per cent in January.

Mr Fabrega will be replaced by Alejandro Vanoli, currently the head of the National Securities Commission, the regulatory agency for stocks and other securities.

Ms Kirchner's national address onTuesday came after Argentina deposited a US$161 million payment on its restructured debt into a Buenos Aires account of the state-run Banco Nacion, looking to circumvent the US court ruling by changing the payment venue.

The move has earned the South American country a contempt-of-court ruling from US federal judge Thomas Griesa, who has blocked former payment agent Bank of New York Mellon from forwarding Argentine interest payments to bondholders.

In a tortuous speech, Ms Kirchner lashed out at Argentine business interests and the United States, which her government accuses of supporting the "vulture funds." She said that on her recent visit to fellow Argentine Pope Francis - whose help she has sought in the ongoing debt row - police warned her about supposed plots against her by the Islamic State group.

The address appeared to unsettle markets. On the Merval stock index in Buenos Aires, 68 out of 80 companies' stocks posted losses. - AFP

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