Argentina's informal peso plunges on economy ministry changes



* Silvina Batakis appointed as Argentina's new economy minister

* Batakis's unorthodox profile may not calm expectations - Citi

* Chile's peso recovers from all-time low

* Chile finalizes proposed constitution, final vote on Sept. 4 (Updates prices)

By Susan Mathew and Sruthi Shankar

July 4 (Reuters) - Argentina's black market peso slumped more than 14% on Monday after the abrupt resignation of long-standing economy minister Martin Guzman, while the new minister attempted investors pledging a "sustainable fiscal program".

Argentina's newly appointed economy minister Silvina Batakis and central bank head Miguel Pesce said they would continue work on accumulating reserves and agreed on the need to strengthen local capital markets, the central bank said.

The formal peso ARS-RASL , heavily restricted by capital controls, was last down 0.4% at 125.96, while the closely-watched black market peso ARSB= crashed to 280 per dollar before clawing back to 268.

Batakis, close to Argentina's powerful vice president Cristina Fernandez de Kirchner, is an economist and government official.

She was appointed after Guzman, a moderate and the architect of Argentina's $44 billion deal with the International Monetary Fund, quit amid rising tensions within the ruling Peronist coalition.

With inflation above 60%, a high fiscal deficit, rising fears about debt defaults and savers losing faith in the peso currency, Batakis faces an uphill battle.

"We think that Silvana Batakis's appointment is unlikely to be enough to fix (Argentina's) issues, and hence it may fall short in stabilizing sentiment. Moreover, we believe her more unorthodox profile may work against calming expectations," said Citigroup analysts Fernando Jorge Diaz and Ivan Stambulsky.

Argentina's OTC bonds fell an average 2.5% in thin trading, while the Merval stock index .MERV slumped up to 3.4% before cutting a chunk of its losses. William Jackson, chief emerging markets economist at Capital Economist said the rising influence of Fernandez de Kirchner could lead to a looser fiscal stance, accompanied by higher inflation and tighter capital controls.

"This would push Argentina further away from the path towards macro stability... A sovereign default is starting to look increasingly likely."

Among other regional currencies, Chile's peso CLP= firmed 0.5% to trade at 927.50 per dollar, recovering from an all-time low of 939.60 hit on Friday.

A stronger dollar, sliding prices of copper - Chile's top export, and protests at its biggest mining company Codelco have all hurt the currency this year.

Chile's constitutional assembly handed over the final text of a proposed new constitution to President Gabriel Boric on Monday, with the final vote due on September 4.

The Brazilian real BRL= and the Mexican peso MXN= made small moves against a weaker dollar, with a holiday for U.S. markets making for a quite trading session.

Colombian markets were closed for a local holiday.

Key Latin American stock indexes and currencies at 1842 GMT: Stock indexes

Latest

Daily %

change MSCI Emerging Markets

992.73

-0.01 .MSCIEF

MSCI LatAm

2033.37

0.48 .MILA00000PUS

Brazil Bovespa

99101.43

0.15 .BVSP

Mexico IPC

48234.53

1.03 .MXX

Chile IPSA

4978.58

-0.3 .SPIPSA

Argentina MerVal

89369.59 -0.756 .MERV

Currencies

Latest

Daily %

change Brazil real

5.3203

0.00 BRBY

Mexico peso

20.2991

-0.24 MXN=D2

Chile peso

927.5

0.26 CLP=CL

Peru sol

3.8237

0.22 PEN=PE

Argentina peso

125.9600

-0.38 (interbank) ARS=RASL



Argentina is crisis again Link



Reporting by Susan Mathew and Sruthi Shankar in Bengaluru;

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