Financial Regulatory Forum

Argentine court: Congress must rule on central bank head

By Reuters Staff
January 22, 2010

BUENOS AIRES, Jan 22 (Reuters) – An Argentine court ruled on Friday that Congress should decide the fate of Central Bank chief Martin Redrado, who was reinstated in his job by a judge a day after the president sacked him.

The court, rejecting an appeal by the government of President Cristina Fernandez, also upheld a previous injunction that blocked her plans to transfer $6.6 billion in Central Bank reserves to the treasury to pay the public debt.

“The court has decided that the government should not permanently appoint the president of the Central Bank until the legislature has participated,” the court ruling said.

Fernandez asked lawmakers earlier this week to discuss her firing of Redrado, who opposed her plan to use the reserves to service this year’s debt obligations, in an effort to defuse a deepening legal and political row.

A special committee is expected to meet next week on Redrado’s fate, but Fernandez has stressed that any recommendations it makes will be nonbinding.

Fernandez’s bid to tap part of the bank’s $48 billion in foreign reserves has sparked legal challenges and political tension, rattling financial markets and raising concerns that a planned bond swap could be delayed.

Government ministers, however, say the turmoil at the Central Bank would have no effect on the planned swap of $20 billion in defaulted bonds, which the Argentine government is expected to launch in the next few weeks.

Locally-traded Argentine bonds did not immediately react to the news, and were trading 0.9 percent lower on average. (Reporting by Guido Nejamkis and Helen Popper; Editing by Leslie Adler) ((helen.popper@thomsonreuters.com; Tel: +54 11 4318 0655; Reuters Messaging: helen.popper.reuters.com@reuters.net)) ((For help: Click “Contact Us” in your desk top, click here [HELP] or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com; Tel: +1 646-223-5546))

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