By Ana Isabel Martinez and Michael O'Boyle
MEXICO CITY (Reuters) - Mexican Central Bank Governor Agustin Carstens will stand down in July, a move that adds doubts about the direction of Latin America's No. 2 economy following the election of Donald Trump as U.S. president.
The central bank on Thursday announced the impending departure of the 58-year-old Carstens, who has been at the helm of the central bank since 2010 and whose term had been due to conclude at the end of 2021.
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Carstens, a former Mexican finance minister and highly respected by international investors, will leave to take the top job at the Bank for International Settlements (BIS) in October for a five-year term, the Basel-based BIS said. Carstens has for some time had his eye on such a role. He ran unsuccessfully in 2011 to head the International Monetary Fund, losing to France's Christine Lagarde.
His replacement was not immediately clear, but at an afternoon news conference, Carstens said he expected Mexico's president to name the new governor before he steps down at the end of June.
The peso currency <MXN=D2>, which has been battered by fears surrounding the Trump presidency, weakened more than 1 percent against the U.S. dollar on the news that Carstens was leaving, hitting its lowest since mid-November in the aftermath of the election.
The peso later pared losses to trade down about 0.8 percent.
Carstens said it was "exaggerated" to attribute the day's peso depreciation to his resignation, saying that it was a reaction to movements in global interest rates.
Carstens also said that the federal government had respected the central bank's autonomy and he was sure that current Finance Minister Jose Antonio Meade would be able to maintain the confidence of investors in Mexico.
Meade said that there would be an orderly transition.
"It was shocking," Ernesto Revilla, an economist at Banamex, said of Carstens' departure. "There were rumors of this, but no one was expecting it to happen so soon, especially with the new Trump scenario."
"Agustin has been a pillar of economic policy in Mexico," Revilla noted.
The peso suffered on Thursday because "there is no clear successor at the central bank ... There is no one on the top of peoples' minds of who could take his place," he added.
LEAVING IN A STORM?
At the news conference, Carstens was asked whether he was jumping ship in the middle of the storm, a reference to the election of Donald Trump. He replied that he would still be around for seven more months.
"I hope the storm does not last that long," he said.
Among possible successors mentioned were Alejandro Werner, a former deputy finance minister who holds the top post for the Western Hemisphere at the International Monetary Fund, as well as current deputy central bank governor Manuel Ramos Francia, who is less well known in global financial circles.
Former Finance Minister Luis Videgaray, a close ally of President Enrique Pena Nieto, is also seen as a potential replacement, though he is a divisive figure in Mexican politics.
During the U.S. presidential campaign, Carstens warned that Trump's election could hit Mexico like a hurricane.
However, following Trump's surprise victory, he suggested the next U.S. government's impact could be less severe.
Most members of the central bank's board are concerned that uncertainty about new economic policies under Trump could further hammer the peso, according to minutes from the central bank board´s last meeting released earlier on Thursday.
"Going forward, the majority agreed it's possible that the ... recovery won't be sustainable due to the aforementioned uncertainty surrounding the economic policies of the new administration of the U.S. government," the minutes said.
Trump threatened to rip up a free trade deal with Mexico during the campaign and any such move could hit Mexico's economy, which sends around 80 percent of its exports to the United States.
Mexico's central bank raised its main interest rate by 50 basis points to 5.25 percent on Nov. 17, the fourth hike this year to support the peso, which hit a record low after Trump's win. It is down more than 20 percent this year.
Carstens is known as a savvy political operator who rose from being the central bank's chief economist in the 1990s to hold senior posts in the finance ministry. As head of the central bank, he presided over Mexico's recovery from the global financial crisis and helped keep inflation low in a country that had suffered a string of economic mishaps in previous years.
(Additonal reporting by Miguel Angel Gutierrez, and Noe Torres; Editing by Simon Gardner and Andrew Hay)