Volatile world financial markets - and not Argentina’s economic policy - pose the biggest threat to the Argentine economy, Central Bank president Martin Redrado said on Monday.

Global uncertainty may be making investors wary of Argentina, but the country’s increased foreign currency reserves are helping it to withstand shocks from abroad, Redrado told a forum of international economists and bankers in Buenos Aires.
Global markets will be volatile until the U.S. housing crisis “hits bottom,” he said - but that should not limit Argentina, which has shored up government cash flows since its historic 2001 default on US$95 billion in debt.
“The strategy to develop liquidity cushions in bonanza times has allowed us to slip through in an unprecedented way,” Redrado said.
The country has built trade and budget surpluses, partly because of long-term gains in farm export income, which has increased since 2001 with climbing food prices.
The central bank reported US$47.2 billion in foreign currency reserves on Aug. 22.
Redrado last week dismissed as “unfounded” investor doubts over Argentina’s ability to service its debt, noting that the budget surplus is now three times the 1.3 percent of GDP needed to keep continue debt payments at current costs.
Still, he warned those economic policies do not guarantee that Argentina will be able to entirely separate itself from broader global problems.
“It’s not realistic to think we can decouple if the international situation continues deteriorating,” he said.
Argentina in recent weeks began buying back an unspecified amount of 2008 and 2009 bonds to reassure investors as bond prices fell. Many had interpreted the early August sale of US$1.5 billion in debt to Venezuela as a sign the government may be running short on cash. Those 2015 bonds were issued with an unusually high 15 percent interest rate.
(Source: Forbes.com)