Shift in the monetary policy? In short, (9am BA Time) a press conference from Dujovne after Sturzengger´s resignation

ARGENTINA - In Brief 15 Jun 2018 by Esteban Fernández Medrano
Federico Sturzenegger resigned as president of the Central Bank. Former finance Minister Luis Caputo, which is one of Macri’s most trusted ministers, takes the role as head of the local monetary authority. Treasury Minister Dujoven, re-units Finance Ministry and Treasury under his commands. With the unification of Treasury and Finance Dujovne has been assigned again the role of Economic Minister (asides labor and energy), rather than just the head of an economic team. He is expected to give a conference at 9am, Buenos Aires time with more explanations on these events. Sturzenegger’s resignation came after another day of strong peso weakness. Thursday the peso depreciated 6.4% in a day or 11.3% in a week adding up to 69.2% in a year (reaching at market close the spot ask rate 28.44 AR$/US$). Be this resignation a request of President Macri or a decision of Sturzengger is not clear, but in his resignation letter, the former central bank president stressed out the loss of credibility he had to endure recently, which made it impossible for him to continue. Such loss of credibility might have started last December when the executive announced softer inflation targets, so as to induce the BCRA to cut rates, when it was apparent that Sturzenegger was not truly convinced of cutting rates. But the true hit came when he had to face a strong run against the peso ahead of the May Lebac issuance, which due to his previous sterilization policy had become a true roll-over nightmare. This run triggered back and forth announcement about the BCRA intervention in the FX market. From an all or nothing stand, selling dollars at 25AR$/US$, offering USD 5bn per day, to an announcement of no ...

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