Peru's Humala says to reappoint central banker

Peruvian President-elect Ollanta Humala talks during a meeting with the Andean Development Corporation (CAF) President Enrique Garcia (unseen) in Caracas July 15, 2011.

LIMA (Reuters) - Peru's leftist President-elect Ollanta Humala surprised the country late on Sunday by saying he will reappoint central bank chief Julio Velarde, who is highly respected by investors on Wall Street.

Humala, a former radical who once railed against foreign companies, revealed his pick as critics encouraged him to make a bold move to generate confidence that he would fulfill his promises to prudently manage one of the world's fastest-growing economies.

"I've spoken with Julio Velarde so that he stays on as president of the central bank and he has accepted, so we'll continue to have Julio Velarde as the president of the central bank," Humala, who takes office on July 28, said on local television.

Velarde and Humala met about the post after the work week ended on Friday, a central bank source said. Velarde was appointed to his current term by departing President Alan Garcia.

Humala had been expected to name Oscar Dancourt -- an academic economist who is a member of his transition team and a former central bank president -- to take over at the central bank.

Velarde is regarded as a rare breed among central bankers, having successfully slayed hyperinflation in the 1990s and averted deflation during the most recent global economic crisis.

Humala recast himself as a moderate to help win the presidential election in June but has seen his approval rating fall over the past few weeks to 41 percent from 70 percent, a poll by the Ipsos pollster showed on Sunday.

He has been criticized for taking a relatively long time to appoint a cabinet, which is still being put together, and an ethics flap involving his brother, Alexis Humala, who flew to Russia to meet with officials there about natural gas and other investment opportunities in Peru.

Peruvian newspapers said it reeked of nepotism and Humala responded by suspending his brother from his political party.

Humala is now expected to name his cabinet on Wednesday.

Speaking on the TV show Cuarto Poder, Humala was asked if he would name Luis Miguel Castilla Rubio, who stepped down this weekend as a vice minister in the finance ministry, to be the country's next finance minister.

"Everything is possible, but this we will be announcing during the week," Humala said. "We are going to build a cabinet of national conciliation, to give economic stability to the country."

Castilla, an experienced economist, is associated with the country's free-market economic model, which Humala criticized during his campaign for prompting a surge in growth over the past two decades but leaving behind a third of Peruvians mired in poverty.

Kurt Burneo, a technocrat on Humala's transition team, has been considered by many the frontrunner for the finance ministry post.

(Reporting by Patricia Velez, Marco Aquino and Terry Wade; editing by Christopher Wilson)