Argentina’s Merval stock index is down about 7% Thursday after taking an 8% beating Wednesday as well.

The selling off is all likely due to Wednesday’s news that the country’s Central Bank head, Juan Carlos Fabrega, resigned from his post. The rumours that he was out starting swirling around in the Argentine media Wednesday morning.

Fabrega was in favour of negotiating with the group of hedge fund creditors whose lawsuit for over $US1.3 billion in sovereign debt tipped the country into default at the end of July. Reports also indicated that he did not get along with Axel Kicillof, the Argentina’s economy minister who has a close relationship with President Cristina Fernandez de Kirchner.

Fabrega was replaced by securities regulator Alejandro Vanoli.

Check out the carnage below:

Fabrega had only helmed the Central Bank for about a year. In that year, however, he oversaw a big devaluation of the peso (in January) and watched dollar reserves dwindle to dangerous lows of about $US24 billion.

Fearing an all-too-familiar economic crash, Argentines are sending dollars out of the country at a rapid rate, and President Cristina Fernandez de Kirchner publicly blamed all of this on Fabrega on Tuesday night.

“You blame me for the flight of capital and the rising dollar, that’s fine,” said Fernandez speaking to Fabrega in the front row of her public speech. “I feel for the dollar losses and not another one should leave the country. Besides that, you continue to have a problem with the economy that I don’t have to solve. Just be sure another dollar does not leave the country.”

But the country’s problems were in the making before Fabrega’s tenure, and they are beyond anything one central banker can fix. Low commodities prices have hit Argentina’s exports hard and its defaulted status is keeping investors cautious.

Barclays estimates that if things go on like this, by this time next year Argentina’s dollar reserves could be as low as $US10 billion.

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