Argentina’s expected co-operation with the government has been confirmed explicitly by the central bank president and the economy ministry. Bank president Mercedes Marco del Pont told reporters that the Banco Central will co-ordinate its policies with the country’s Economy Ministry, while economy minister Amado Boudou announced the formation of a new economic council, which will group officials from both institutions.
Focus at the central bank will be on company output rather than inflation, said Ms Marco del Pont: “We want to focus on price stability but from a different, non-orthodox view, from the supply side.” Annual inflation is running at 32.1 per cent, according to a report by Graciela Bevacqua, the former head of the consumer price department at the national statistics institute. Read more
The peso hit an all-time low against the dollar during trading today, apparently because of dollar purchases. The current rate is lower even that that which followed the Argentinian debt default and devaluation.
I called the end too soon. The Argentine central bank fiasco has clearly outlived Martín Redrado stepping aside. In an unexpected twist, a presidential ally was chosen to head the country’s central bank.
From tomorrow’s paper… Read more
In a move that has surprised markets, Mercedes Marcó del Pont has been chosen as the new Argentinian central bank chief with immediate effect. Markets had expected the interim governor and former chief, Mario Blejer, to remain in office until September, when ousted chief Martin Redrado’s term was due to end.
The appointment heightens fears for central bank independence in the country. “Ms Marcó del Pont is seen as very close to the government, which means that the central bank will continue to be virtually subordinated, in terms of policy directives, to the government,” said Alberto Ramos, an economist at Goldman Sachs. Ms Marcó del Pont previously headed the state-run Banco de la Nación. (More from the paper)
Central bank governor Martin Redrado has gone, but the story continues. It transpires the Argentine President may seek changes to the central bank’s charter to allow the government to tap the institution’s reserves, an Argentine newspaper has said.
Cristina Fernandez de Kirchner and her husband, lawmaker Nestor Kirchner, want to be able to use the reserves to help create jobs or finance infrastructure projects, said La Nacion, without stating its source. Apparently the proposal may be sent to Congress next month.
After weeks of acrimonious fighting, Martín Redrado, the central bank president who President Cristina Fernández has been attempting to fire , accepted defeat.
Some background for those who haven’t been following the saga:
The dispute started last month, when Mr Redrado refused to hand over $6.5bn to help pay off government debt after an emergency decree from Ms Fernández. Mr Redrado argued that the move could leave the central bank open to suits from bondholders who are still trying to get paid back after Argentina’s $100bn default.
So, earlier this month, Ms Fernandez released another emergency decree: this time sacking Mr Redrado.
Problem was, Mr Redrado won’t comply with that decree either. Read more
By Jude Webber, Argentina correspondent
Will the real president of Argentina’s central bank please step forward. Read more
In the ongoing battle between the central bank and the government, it appears the government has taken the advantage. Bank president Martin Redrado, 48, was prevented from entering the central bank last night and hasn’t appeared at the institution today. In his absence, vice president Miguel Pesce is in charge.
Congress will decide who gets the job, and also whether central bank reserves may be used to pay for debt. If another bank president is found but funds are not allowed to be transferred, the Fernandez camp will have gained little from the furore: Mr Redrado’s refusal to transfer the funds without Congressional approval is the reason his resignation was called for.
The Argentinian justice system has ruled Congress should decide whether central bank governor Martin Redrado will keep his job. It was the courts that reinstated Mr Redrado following his presidential sacking. They also found in Mr Redrado’s favour, preventing the central bank from transferring a disputed $6.6bn foreign reserves, as requested by the President. The courts maintained that injunction today.
So says Argentine central bank governor Martin Redrado, after a great deal of confusion. Judge Thomas Griesa was reported as lifting the ban, but hours later Mr Redrado told the press he could not access the account. The embargo was part of a long-running legal action by bondholders still unpaid since the 2001 Argentinian default. The dispute is not directly related to the Argentinian President’s recent (indeed, ongoing) attempts to unseat Mr Redrado.