Argentine economy minister named

Mr de la Rua is facing the biggest test of his presidency

Argentine President Fernando de la Rua has appointed Ricardo Lopez Murphy to the crucial post of economy minister.

Mr Lopez Murphy is a conservative, American-trained economist and former defence minister popular with the markets.

The keenly awaited announcement follows two days of intensive discussions after the resignation on Friday of the previous minister, Jose Lois Machinea, who had been criticised for failing to lift the economy out of a 30-month recession.

The president is looking for a minister with the profile necessary to enact his goals: economic recovery, growth and more employment

Ricardo Ostuni, presidential spokesman

Mr de la Rua also announced that Argentina's controversial currency peg to the dollar, credited with helping to stamp out hyperinflation in the 1980s, would remain.

On Saturday, the president asked his entire government to resign to allow him a free hand to reshuffle posts - but has since said no new appointments will be announced for several days.

His spokesman said that Mr Machinea's successor would need to be someone capable of "kick-starting the economy, boosting growth and winning back jobs".

In early January, international lenders unveiled a bail-out package worth almost $40bn, but it has so far failed to restore growth.

Unemployment is currently running at 15%.

Investors

Mr de la Rua's only other reshuffle of his 15-month presidency was last October when Vice-President Carlos Alvarez resigned, revealing cracks in the ruling coalition.

Mr Machinea: Left under a cloud

Analysts say the current shake-up comes at a key time for Argentina, which, because of its large foreign debt, is sensitive to investor sentiment abroad.

Investors have become increasingly sceptical of the government's ability to revive the economy.

Their mood has not been helped by a money-laundering scandal involving the head of the Central Bank.

Two other factors undermining investor confidence are the uncertain outlook of the US economy, and concerns that Argentina could be vulnerable to fallout from Turkey's financial crisis.