The chief of the central bank of Argentina has resigned reportedly over disagreement about measures and policies for restoring confidence in the country’s economy that is in a dire state.
The country’s currency peso tumbled against the US dollar following the news of the surprise exit of the central bank head Luis Caputo who had been in the position only since June.
The country’s deputy economics minister Guido Sandleris would replace Caputo, said a government statement which also stated that the resignation was because of personal reasons.
A bailout package of $50bn from the International Monetary Fund is being finalised by Argentina.
The country is in desperate need for the IMF loan to bolster confidence in the economy because the economy is in recession, interest rates have soared to 60 per cent and the peso fallen by half against the US dollar this year.
President Mauricio Macri is in New York this week for a United Nations meeting, but was due to meet Wall Street financiers and potential investors.
The commitment of the government to the independence of the central bank was put into question when Caputo, who is also a former finance minister, was appointed as its gead three months ago.
A statement from the central bank said: “This resignation is due to personal reasons, with the conviction that a new agreement with the International Monetary Fund will re-establish confidence in the fiscal, financial, monetary and exchange rate situation.”
But the news led to a further depreciation of the peso by 4 per cent while there was a drop of more than 4 per cent in the main share market of Argentina when it opened.
Possibilities of differences between Caputo and finance minister Nicolas Dujovne were reported by Argentina’s Ambito Financiero financial newspaper. The report said hat the role of Caputo in the IMF negotiations had not been impressive.
The Argentine economy depressed by 4.2 per cent in the second quarter, the government announced last week. This drop was the largest quarterly contraction in the economy since 2014.
The primary reason for the contraction was accorded to a significant drop in exports because of long and severe drought in the country recently.
According to analysts, the current period is crucial for Argentina.
There is major lack of confidence for the peso but analysts say that if the government manages to secure the IMF loan and implements the economic reforms, the fall of the currency can be arrested.
However questions over leadership are also being raised.
The president last month announced the IMF bailout on national television even before it was actually talked about with the Fund and this was criticised.
There are also reports of bickering in the economic team of Macri which was exhibited by the resignation of Caputo.
(Adapted from BBC.com)