Political Risk Latin America Blog @PolRiskLatam

Central Bank robbery

Posted in News and Articles, Political Risk by politicalrisklatam on February 4, 2010

by The Economist, February 4, 2010.

The president gets her way, again, but at a price.

Critics of Argentina’s government have two main explanations for the behaviour of Cristina Fernández de Kirchner’s administration: cunning conspiracy or bumbling incompetence. Two bits of evidence suggest the truth lies somewhere in between.

First, Martín Redrado, the governor of the Central Bank, was pushed out on January 29th, after a battle with the president over the bank’s dollar reserves. Ms Fernández ostensibly wanted to use the cash to reassure foreign investors about Argentina’s creditworthiness. If so, her government has achieved the opposite with its bullying of Mr Redrado, who was making a stand for central-bank independence—something investors tend to like. That his replacement will be Mercedes Marcó del Pont, an economist said to be close to the presidency, is also a discouraging sign.

Second, it emerged that in 2008, when the global financial crisis was at its height, Ms Fernández’s husband and predecessor as president, Néstor Kirchner, sold $2m worth of pesos and bought dollars. There was nothing illegal about this, and Mr Kirchner did declare the transaction. But the trade hardly expressed confidence in the government’s economic management…(continue reading)

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