Argentina's Central Bank Governor Resigns After Long Rift

Politics Reuters

Argentina's central bank governor, Juan Carlos Fabrega, resigned on Wednesday after a long tussle with the government over whether policymaking should focus on taming rampant inflation or spurring growth in the slowing economy.

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A spokesman for President Cristina Fernandez said Fabrega would be replaced by Alejandro Vanoli, the head of the country's markets regulator.

"Fabrega handed in his resignation this afternoon in a way that was impossible to decline," a source at the central bank told Reuters.

Market talk of Fabrega's imminent departure before the news was confirmed sparked a sharp sell-off in the benchmark Merval stock index, extending earlier losses in the session. Argentine bonds also fell.

Investment bank analysts said markets would view the confirmation negatively at a time the government is battling a tanking local currency and one of the world's highest inflation rates, weeks after defaulting on its debt again.

"Not a good sign," said Goldman Sachs analyst Alberto Ramos. "Fabrega was perceived to be a moderating voice and someone that really understood financial market dynamics." 

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(Reporting by Jorge Otaola, Walter Bianchi, Sarah Marsh and Hugh Bronstein in Buenos Aires and Davide Scigliuzzo of Thomsone Reuters IFR in New York; Writing by Richard Lough; Editing by Dan Grebler and Andre Grenon)