• Says central bank doesn’t target foreign exchange levels
  • Sturzenegger was appointed by new president in December

Argentina’s central bank is training its sights on inflation and regards the exchange rate as a cushion for the economy, its President Federico Sturzenegger said.

“The most important thing is to have a central bank that is focused on inflation and then let the exchange rate do its job of being a shock absorber for the economy,” Sturzenegger said in Shanghai, where he was attending the Group of 20 meeting. “Intervention is to correct spikes and developments that don’t bear relation with fundamentals, not to sustain an exchange rate that is off its equilibrium.”

Federico Sturzenegger in Shanghai
Federico Sturzenegger in Shanghai
Photographer: Qilai Shen/Bloomberg

Inflation quickened in January, with consumer prices rising 4.1 percent from a month earlier, according to an index produced by the city of Buenos Aires. Annual inflation stands at 29.6 percent.

Sturzenegger, who also said the central bank doesn’t target foreign-exchange levels, took the helm of the central bank in December, named by Argentina’s newly elected President Mauricio Macri.

In his first month in office, Macri devalued the peso, lifted most capital and trade restrictions, started to overhaul the statistics agency and kicked off talks with disgruntled creditors from the nation’s 2001 default. In doing so he is diverging from previous President Cristina Fernandez de Kirchner and her late husband and predecessor, Nestor Kirchner, under whom Argentina restricted trade, defied holders of its defaulted debt and managed the currency with daily interventions from the central bank.

Tightening money supply is not a threat to gross domestic product growth, Sturzenegger said. “You always strike a balance” on money supply, he said. “But today we have an inflation problem we’re trying to bring down.”

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