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Argentina’s Central Bank Governor Resigns After Long Rift

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.

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.” 

(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)

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