Argentine president replaces respected central bank head

Argentine President Nestor Kirchner replaced the head of the central bank on Friday, removing one of the government's most respected figures on Wall Street just as the country seeks to work out the final details of a US$100-billion debt restructuring.

In a surprise move that rattled Argentine financial markets, the government said that Alfonso Prat-Gay, a former head of emerging market research at JP Morgan Chase & Co, would be succeeded by the deputy foreign minister, Martin Redrado, when Prat-Gay's term expires on Wednesday.

Government officials declined to say why Kirchner made the changes. Some analysts speculated that the shake-up was intended to give the president more room to intervene in monetary policy. Fears of such increased political power helped push Argentine bonds lower in New York on Friday and sent the peso tumbling more than 1 percent at its nadir in Buenos Aires before it recovered and settled flat.

Prat-Gay, 38, was seen by many as the most market-friendly face in a government that has otherwise unnerved investors by taking a tough stance in talks with private bondholders and lenders like the International Monetary Fund. Prat-Gay was one of a small group of officials who met last month in Buenos Aires with the IMF's new managing director, Rodrigo de Rato, pressing the fund to delay US$1.1 billion in loan payments while Argentina works out its debt restructuring.

The IMF granted the delay on Friday, saying in a statement that it would give Argentina another year to make the payments. However, Argentina still has to repay the IMF an additional US$1.46 billion in obligations coming due in the next four months, the fund said.