BUENOS AIRES (Reuters) - Argentine central bank chief Alejandro Vanoli resigned on Wednesday, opening the way for President-elect Mauricio Macri to press ahead with plans to unwind capital controls and unify the exchange rate.
Macri’s promise to liberalize Latin America’s third biggest economy set him on a collision course with Vanoli, a trusted ally of the South American country’s outgoing leftist leader, Cristina Fernandez, who believes in heavy state controls.
Macri urged Vanoli to quit immediately after he won the Nov. 22 run-off election, saying he would install respected economist and congressman Federico Sturzenegger once Vanoli vacated the seat.
A central bank source said Fernandez’s government had pressured Vanoli to delay because it did not want to do the incoming government a favor. Vanoli’s mandate had been due to end in 2019.
Vanoli had criticized Macri’s plans to lift capital controls, warning a sharp devaluation would follow. In his resignation letter to Fernandez, Vanoli said previous devaluations in Argentina had led to recession, spiraling inflation and a rise in unemployment.
“An abrupt currency devaluation is not a path the nation’s economy should follow,” Vanoli wrote in the six-page letter. “If the president-elect forces a violent devaluation, it will only be because of his policy decisions.”
During campaigning, Macri countered similar barbs from Fernandez’ Front for Victory party by pointing to the steady weakening of the peso during her eight years in power.
The official exchange rate ARS=RASL, which is tightly managed by the central bank, fell almost 70 percent from 2007 to 2015, due largely to a dollar crunch caused by Argentina's banishment from global credit markets and a slump in commodity prices.
Fernandez imposed tough capital controls and import restrictions in 2011 to defend the central bank’s dwindling reserves and prop up the peso. Her opponents say they fuel a black market that indicates the peso should be even weaker.
Currency traders said the resignation was expected, and would not impact financial markets.
Macri vows to let the peso float under the bank’s supervision, saying dollar inflows into an economy open to investors will keep the peso on a sustainable footing.
Currency reform can probably only begin once a new bank president takes office and it is clear there will be a sufficient supply of dollars, Macri’s nominee for finance minister said over the weekend.
Writing by Richard Lough; Editing by Frances Kerry and Alistair Bell