Update: Redrado says ban not lifted
A US judge has lifted the freeze on Argentine central bank accounts held at the Fed, Argentina’s finance secretary told Reuters. Finance Secretary Hernan Lorenzino said Judge Thomas Griesa “lifted the measure so both sides can come to an agreement.” Read more
By Jude Webber
With Argentina mired in an unprecedented crisis sparked by government plans to use central bank reserves to pay off debt, a New York judge has frozen $1.75m of the bank’s assets held in the US Federal Reserve at the request of two so-called vulture funds. Read more
Who said economics was boring?
Last Wednesday, the Argentine President tried to fire central bank governor Martin Redrado by decree. Mr Redrado continued to work quietly in his office, saying the authority to fire him lay with Congress. President Cristina Fernandez de Kirchner named a successor, Mario Blejer.
Mr Redrado – hitherto co-operative with government – had refused to put $6.6bn of Argentina’s $48bn foreign currency reserves toward $13bn debt obligations due to mature this year, as directed by the President. He wanted a mandate from Congress on this controversial move. On Thursday, Mr Redrado did step down, vowing to appeal.
Less than 24 hours later, Mr Redrado was back in the office. Read more
Cristina Fernandez has asked for the resignation of central bank president Martin Redrado, following tension over the release of foreign currency reserves. Mr Redrado had resisted releasing $6.5bn in foreign currency reserves that Ms Fernandez had ordered for a special fund to meet the country’s rising debt obligations. A replacement has already been named: former central bank president Mario Blejer will take up the role.
The Harvard-educated Mr Redrado, who almost tripled Argentina’s reserve levels since taking office in September 2004, had supported government policy until now. Whether the use of reserves is sound economic policy remains to be seen: one economist said “it might be pushing things a bit too far.”
Argentina seems determined not to repeat the default of 2001. Economy minister Amado Boudou has said $6.6bn of the central bank’s international reserves will be placed into a fund this month, to help the government pay bondholders and international lenders for debts. The fund will cover about half of $13bn interest and principal payments due in 2010. The government said today it will give the central bank 10-year dollar-denominated notes, known as Letes, in exchange for the funds. Read more