Argentina Names New Central Bank President

President Cristina Fernandez de Kirchner named a new central bank president Wednesday when its chief resigned after being blamed for not doing enough to contain the value of the peso against the dollar.



The president designated Alejandro Vanoli, head of the National Securities Commission, to the post after accepting the resignation of Juan Carlos Fabrega, presidential spokesman Alfredo Scoccimarro said in a televised press conference.



The Senate must now approve Vanoli's appointment before he can take office.



This is the first shuffle in the administration since November, when Fernandez de Kirchner appointed Fabrega as well as a new Cabinet chief and economy minister to revive public support after her party lost by a larger-than-expected margin in the midterm congressional election in October 2013.



Fabrega, a 65-year-old veteran banker, went on to help stabilize central bank reserves after they fell to a seven-year low of $28 billion from a peak of $53 billion in 2011.



A main reason for the slide was capital flight, as Argentinians dumped the pesos on concerns that a depreciating currency, double-digit inflation and worsening economy would continue to eat away at their savings and spending power.



The flight abated for a while, but has increased since the country defaulted on its debts for a second time in 13 years last July.



This led to a surge in the buying of dollars on the black market, where the peso hit a low of 16 per dollar last week for a 90 percent gap with the official rate of 8.43 per dollar.



The decline on the black market, a key measurement of Argentinians' confidence in the peso and the government's capacity to administer the economy, apparently has ruffled Fernandez de Kirchner.



She lashed out at Fabrega in a televised speech Tuesday. Without naming him, she said the central bank is failing to contain capital flight and even helping banks to bet against the market. She said it is likely that central bank officials have "filtered information" to banks to help them determine their trades.



To put a stop to it, she said she would ask Economy Minister Axel Kicillof to crack down on illegal currency trading and make sure that banks are not hoarding dollars despite a requirement to reduce their holdings to 20 percent of their portfolios from 30 percent.



The comments show a preference for Kicillof, a 43-year-old economist who favors expansive policies to sustain consumer demand as a motor for economic growth.



Kicillof and Fabrega have clashed over how to manage interest rates, with Fabrega seeking higher rates to deter the flight to dollars. Kicillof has pushed for lower rates to spur borrowing and credit as keys for sustaining economic activity and jobs.



Fernandez de Kirchner also said late Tuesday that she is in favor of a bill to crack down on illegal currency, including the use of police in raids on money houses, another slight against Fabrega's failure to contain capital flight.



An economist, Vanoli is no friend of the black market, which operates out of the backrooms of money houses and jewelry stores and even in hotels. He has said that newspapers shouldn't publish the black market rate, saying it is comparable to printing "the price of cocaine."



At the National Securities Commission, Vanoli has pushed for greater regulation of publicly traded companies, including state intervention.



www.aa.com.tr/en - Buenos Aires