BUENOS AIRES (AFP) – Argentina’s choice of new central bank chief triggered nervous reaction Thursday, sending the Buenos Aires stock market into a dive and drawing warnings of reckless policymaking.
Stocks closed 7.05 per cent lower in Buenos Aires, after falling 8.22 per cent Wednesday on news of Juan Carlos Fabrega’s resignation.
Markets appeared to take little comfort in the government’s assurances that it would make no sweeping changes at the central bank, known as BCRA.
Cabinet chief Jorge Capitanich told journalists the new central bank governor, Alejandro Vanoli, had the exact same job description as his hastily departed predecessor – to shepherd the country’s struggling economy.
“Vanoli has to carry out the basic charter of the BCRA, which is very clear and says he must create the conditions for economic growth and employment, monetary stability and apply regulatory laws,” Capitanich said.
Asked if there would be any reforms to the wide-ranging “financial entities law” that governs the bank’s oversight of the commercial banking and financial industries, Capitanich said: “The answer is no.”
But analysts predicted Vanoli, the former head of the national stocks and securities regulator, would bring more extreme economic policymaking to Latin America’s third-largest economy, already locked out of global financial markets since its 2001 debt default and grappling with nearly 40 per cent annual inflation and a tumbling currency.
“The resignation of the governor of the Argentine central bank opens the door for even more unorthodox economic policy,” said David Rees, emerging markets economist at Capital Economics.