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article imageArgentina's central bank chief resigns

By AFP     Sep 25, 2018 in World

The president of Argentina's central bank, Luis Caputo, abruptly resigned on Tuesday after just a few months in the position, amid a volatile economic crisis.

The resignation, which the bank said was for "personal reasons," came as President Mauricio Macri was trying to negotiate accelerated IMF funding from a $50 billion loan agreed three months ago to help stabilize Argentina's economy.

Macri is currently in New York, attending the United Nations General Assembly, while back home discontent is growing as a 24-hour general strike paralyzed the country.

The central bank said in a statement announcing Caputo's resignation that he was doing so with the conviction that a "new agreement with the International Monetary Fund will restore confidence in the fiscal, financial, monetary and exchange situation."

But analysts said there were already rumors he would resign due to "a disagreement with the IMF over monetary policy," according to Argentine economist Gabriel Rubinstein.

Caputo is close to the center-right Macri and was finance minister before he was appointed president of the central bank in June.

Another economist, Fausto Spotorno said Caputo was never seen as a long-term fixture and that "the government's priority is an agreement with the IMF."

After a crisis of confidence beginning in April saw the value of the peso plunge, Argentina negotiated a $50 billion bailout loan from the IMF that included an initial $15 billion tranche in June.

But that failed to prop up the currency and Macri announced in August he would be seeking an accelerated disbursement of the remainder of the funds that were initially due to be transferred over a three-year period.

That sparked two days of damaging drops in the value of the peso, which lost 20 percent against the dollar. For the year it is down around 50 percent.

Macri responded by announcing new, and unpopular, austerity measures including halving the number of government ministries and restoring taxes on grain exports.

The central bank hiked interest rates to a world-high 60 percent and the peso has remained largely stable since its sudden crash in August.

But restoring faith in the peso has proved difficult with skeptical Argentines believed to be holding $300 billion outside of the country's fiscal circuit, either in cash or abroad, in a bid to protect their assets from the peso's woes.

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