Argentina reels from strike as central bank chief resigns

BUENOS AIRES — Argentina was paralyzed by a general strike on Tuesday while the central bank chief resigned amid talks with the International Monetary Fund on a revised crisis loan package.

As President Mauricio Macri negotiated accelerated funding from a $50 billion loan agreed with the IMF in June, the country’s beleaguered currency was hit by the news that Luis Caputo had been replaced by Guido Sandleris as central bank chief.

The peso almost immediately slumped 2.2 percent against the dollar.

The IMF seemed to approve of the change, spokesman Gerry Rice expressing the desire to continue its “close and constructive relationship” with Argentina’s central bank.

Later in the day, Macri said a new agreement with the IMF would be announced on Wednesday providing advances of new funds that should ease worries about a possible government default.

“We hope that it will definitely clear up other doubts about our financing capacity and the stability of monetary policy,” Macri told reporters in New York, where he is attending the UN General Assembly session.

His center-right government burned through an initial $15 billion tranche of the loan in June to prop up the beleaguered peso, with a further $3 billion due in November and the rest over the next three years.

Argentines protested the loss of purchasing power brought on by the peso losing around 50 percent of its value against the dollar this year.

Many shops, banks and public offices were closed with public transport and taxis at a standstill.

Following Monday’s mass demonstration organized by trade unions, left-wing demonstrators faced off against security forces near a key Buenos Aires bridge on Tuesday, but streets in the capital were mostly deserted with many people unable to get to work.

Airports were also deserted with all flights in and out of the country canceled.

The central bank stated in the morning that Caputo had resigned for “personal reasons”, with the conviction that a “new agreement with the International Monetary Fund will restore confidence in the fiscal, financial, monetary and exchange situation”.

Some analysts said there were already rumors on Friday that he would resign due to “a disagreement with the IMF over monetary policy”, according to Argentine economist Gabriel Rubinstein.

Formerly chief of trading at JP Morgan and Deutsche Bank, Caputo is close to the center-right Macri and was finance minister before he was appointed president of the central bank in June.

Gabriel Torres, Moody’s chief sovereign risk analyst for Argentina, said Caputo’s shock departure “will increase nearterm currency volatility” and reducing volatility would depend on the final terms of the revised IMF agreement.

Economist Fausto Spotorno said Caputo was never seen as a long-term fixture, though, and that “the government’s priority is an agreement with the IMF”.

“I don’t know if the IMF requested he leave or if Caputo preferred to resign rather than take a different path to the one he was advising,” said Management and Fit Institute chief economist Matias Carugati.

“But his departure is linked to the new IMF deal.”