Argentina’s finance minister picked to lead central bank

Argentina’s finance minister picked to lead central bank

Appointment of Luis Caputo comes after weeks of turmoil in foreign exchange markets

After weeks of turmoil on Argentina’s foreign exchange markets, with many investors blaming the central bank for its erratic policy, Federico Sturzenegger resigned as president of the monetary authority.

He will be replaced by Luis Caputo, currently the finance minister, who is widely respected in the markets. His appointment is pending confirmation by the senate.

“Over the last few months, various factors have deteriorated my credibility as president of the central bank, a key attribute for carrying out the co-ordination of expectations which is so important in the task I had been given; that is why I have been driven to present my resignation,” Mr Sturzenegger wrote in a letter to President Mauricio Macri.

The news comes after another day of fury for the peso, as emerging markets around the world suffered in the wake of a surprisingly hawkish US Federal Reserve, which decided on Wednesday to raise interest rates.

Argentina’s peso depreciated 6.5 per cent on Thursday to plumb new historic lows, ending the day at 27.7 pesos to the dollar after having started at 26 pesos to the dollar.

Rumours had been swirling that Mr Macri was angry with Mr Sturzenegger because of his handling of the run on the peso in May, when the central bank sold dollars cheaply only later to allow the peso to keep depreciating.

Mr Sturzenegger’s replacement with Mr Caputo has prompted some critics to question the government’s commitment to strengthening the central bank’s independence as part of an agreement with the International Monetary Fund announced last week, which includes a $50bn bailout.

The move by Mr Caputo, 53, to the central bank will lead to the reunification of the treasury and finance ministries, which were split after the departure of Alfonso Prat-Gay in December 2016. Nicolás Dujovne, the treasury minister, will now also be in charge of the finance ministry.

Mr Caputo worked at Deutsche Bank and JPMorgan before joining the government when Mr Macri was elected president, and he is regarded as a talented trader.

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