Luis Caputo's mandate at the head of the Argentine central bank lasted only three months. The now former governor, who only took office last June, has decided to resign in the midst of the weight crisis. He will be replaced by Guido Sandleris, former Deputy Minister of Finance.
At the basis of the decision, Caputo underlined in a note, there would be "personal reasons", but it seems difficult to think that the markets ignore yet another hitch in the path that Buenos Aires is trying to take to stop the devaluation of the peso that has been going on for months .
"The resignations were presented for personal reasons, with the belief that the agreement reached with the International Monetary Fund will restore confidence in the fiscal, financial, monetary and exchange rate situation," the statement reads.
Caputo is the second president of Banco Central to leave during the Macri presidency. Before him, Federico Sturzenegger gave up his job, deciding to leave immediately after having negotiated the agreement with the IMF.
Currently the Argentine currency trades at 39,40 against the dollar (-5,6%) despite the 50 billion dollar loan obtained from the International Monetary Fund after the request presented last June by the president, Mauricio Macri. Since the beginning of the year, the peso has lost more than 50% of its value against the greenback despite interest rates now skyrocketing to 60%.
It should also be underlined that yesterday, 24 September, the Merval index of the Argentine stock market recorded a plunge of 3,39% although Macri tried to reassure the country: "We will receive more aid from the IMF, even if I cannot say how much because we are still negotiating. There is no way that Argentina is insolvent” – Macri said during an interview with Bloomberg.
We recall that, based on the agreement with the IMF, Argentina will field a massive recovery plan, thanks to which he will be able to access 50 billion in three years, a figure which represents the largest credit line ever granted in the history of the International Monetary Fund, but which however may not be enough.
A few days ago, the IMF spokesman also declared that the Washington institute wants to conclude "as soon as possible" the negotiations that will allow Buenos Aires to receive the money from the aid plan ahead of schedule.
Meanwhile, citizens take to the streets with a 36-hour general strike to protest against the return of the IMF to Argentina, a return that brings to mind the population the great economic crises experienced in the past with the defaults of 2001 and 2014 which still today they haven't stopped being scary.
SECURITY UPDATE TRAINING
Yields on Argentine government bonds recorded significant increases on the day of the resignation of the governor of the central bank which triggered a chain reaction that affected the currency and the stock market. In particular, on ten-year maturities in dollars there was an increase of around 10 basis points, in line with what was marked by the bonds of other countries in the Latin American area, with Brazil in the lead. On euro bonds, the increase is in the order of 25 basis points. On the five-year maturities, the rise in yields on foreign currency bonds stood at around 5-6 basis points. Today, the Argentine Treasury calendar provides for the reopening of a Letras with a maturity of 12 April 2019 and an annual nominal rate of 6%.
