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Argentine stocks plunge after central bank chief quits and replacement causes worries

BUENOS AIRES, Argentina – Argentina’s Merval stock index plunged just over 7 per cent Thursday in a sell-off sparked by the naming of a new central bank chief who many believe will favour interventionist policies.

Traders expect new central banker Alejandro Vanoli will order even more restrictive currency controls in trying to stem capital flight and boost Argentina’s frail economy.

Juan Carlos Fabrega resigned Wednesday after President Cristina Fernandez publicly suggested that the monetary institution might have leaked inside information that led to a steep drop in the peso.

Confidence has been dwindling in Argentina’s economy, which is in recession as it grapples with falling central bank reserves and one of the world’s highest inflation rates.

The stock index ended the day down 7.05 per cent, at 10,703 points.