Argentine judge studying appeal in central bank dispute

By Reuters Staff
January 11, 2010

BUENOS AIRES, Jan 11 (Reuters) – An Argentine judge on Monday was analyzing a government appeal of a court ruling that blocked its plan to use foreign currency reserves to repay debt and reinstated the ousted central bank president.

The plan by President Cristina Fernandez to use billions of dollars to make debt payments has set off an escalating political battle and shaken Argentine financial markets.

Fernandez used a presidential decree to fire Central Bank President Martin Redrado on Thursday for refusing to support the plan.

His ouster was overturned a day later by a federal judge, who also blocked Fernandez’s plan to tap Argentina’s reserves to create a debt repayment fund aimed at guaranteeing the country’s 2010 debt payments.

The turmoil at the central bank has highlighted political instability in Argentina as Fernandez’s cash-strapped government seeks to charm investors and tap international credit markets for the first time after a massive debt default eight years ago.

It wasn’t immediately clear when Federal Judge Maria Jose Sarmiento would make her ruling on the government’s appeal, which was filed over the weekend.

The Argentine peso  was flat in early trading on Monday and stocks opened slightly higher as oil-related shares rose on a climb in global crude oil prices.

Locally traded Argentine bonds  rose 0.6 percent on average as investors bargain hunted after bond prices slid last week because of the dispute, traders said.

The row has effectively left Argentina with two central bank presidents. Fernandez named a replacement for Redrado, but he returned to work on Friday after the judge’s ruling and was reportedly in his central bank office on Monday.

Fernandez has defended the plan to use reserves, and her top aides have accused Redrado of plotting with the opposition to undermine her government, a charge he denies.

Opposition leaders have vowed to try to overturn the presidential decrees that set up the debt repayment fund and ousted Redrado.

They argue Fernandez is looking to use the funds to help free up government resources to increase social spending and boost her languishing popularity ratings in the run-up to the 2011 presidential election. (Reporting and writing by Kevin Gray; Editing by Theodore d’Afflisio)

((kevin.gray@thomsonreuters.com; Tel: +54 11 4510-2505 Reuters Messaging: kevin.gray.reuters.com@reuters.net))

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/