Argentina said Thursday it would make no sweeping changes at its central bank after the director resigned amid an economic slide, sending the Buenos Aires stock market into a dive. Stocks plummeted six percent in opening trade in Buenos Aires, after falling 8.22 percent Wednesday on news of Juan Carlos Fabrega's resignation.
Cabinet chief Jorge Capitanich told journalists the new central bank governor, Alejandro Vanoli, had the exact same job description as his hastily departed predecessor - to shepherd the country's struggling economy. "Vanoli has to carry out the basic charter of the BCRA (central bank), which is very clear and says he must create the conditions for economic growth and employment, monetary stability and apply regulatory laws," Capitanich told journalists.
Asked if there would be any reforms to the wide-ranging "financial entities law" that governs the bank's oversight of the commercial banking and financial industries, Capitanich said: "The answer is no." But analysts predicted Vanoli, the former head of the national stocks and securities regulator, would bring more extreme economic policymaking to Latin America's third-largest economy, already locked out of global financial markets since its 2001 debt default and struggling with nearly 40-percent annual inflation and a tumbling currency.
"The resignation of the governor of the Argentine central bank opens the door for even more unorthodox economic policy," said David Rees, emerging markets economist at Capital Economics. "With... policymaking heading in the wrong direction, the economy looks set to stay stuck in a rut," he said in a note, predicting the economy would shrink two percent this year.
Deutsche Bank said Fabrega "was known to balance some of the policy inconsistencies promoted by the economic ministry" - the portfolio held by Axel Kicillof, the intransigent economist who led Argentina's failed negotiations to restructure its debt. "Meanwhile Mr Vanoli has been instrumental in using renewed powers at the SEC (securities regulator) to investigate companies and tighten the overall auditing of private corporations," Deutsche Bank said, predicting more expansionary policies, inflation, currency trouble and "deeper economic recession."
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