Argentina to seek G20 measures on policy reversals

BUENOS AIRES Nov 4 (Reuters) - Argentina's central bank chief on Wednesday said G20 members should seek coordinated measures to address potential adverse consequences of a reversal in stimulus policies once the global economy rebounds.

"We'll need to coordinate, for example, solutions for a potential tightening in monetary policies in developed countries on international trade and on capital flows," Martin Redrado, the central bank president, told Reuters.

Finance chiefs from the Group of 20 top developed and emerging economies will discuss the unwinding of emergency economic stimulus packages introduced over the last year when they meet in Scotland later this week.

Near-zero interest rates in the United States, Europe and portions of Asia have helped trigger a massive shift in global asset allocation, with investors favoring emerging markets.

But Redrado warned that a rapid "reversal of (low interest rate) policies could lead to financial outflows" in emerging markets such as Argentina.

Argentine bonds rallied more than 60 percent on Buenos Aires markets in the first 10 months of this year and the country's benchmark stock index .Merval gained more than 90 percent in local terms in the period.

Demand for higher-yielding local assets in emerging markets has been so heated that central bankers in other emerging market countries such as Brazil started to contemplate measures to hold back capital.

Brazil last month implemented a 2 percent tax on financial inflows to stem the rapid appreciation of its currency.

While no similar follow-up by Argentina is in the cards, Redrado said the tax was "very important" for the neighboring country. The central bank closely reins in foreign exchange trading in Argentina and intervenes regularly on markets to prevent volatility in the currency.

Argentina, Redrado said, is more interested in the development of financing products such as "liquidity buffers" as an insurance against violent swings in capital flows.

Argentina's economic officials are also expected to meet with representatives of the International Monetary Fund during the G20 meeting and discuss a possible economic review of the country by the Fund, according to local papers. (Reporting by Guido Nejamkis; Writing by Vivianne Rodrigues; editing by Leslie Adler)