In surprise move, Mexican president pulls pick to head central bank

FILE PHOTO: Mexico's Finance Minister Arturo Herrera attends an interview with Reuters, in Mexico City
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MEXICO CITY (Reuters) - The former finance minister tapped to be the next head of Mexico's central bank said on Tuesday that President Andres Manuel Lopez Obrador had changed his mind about choosing him, casting doubt over the future leadership of the Bank of Mexico.

After a senior lawmaker said Arturo Herrera's name had been withdrawn, the former minister issued a statement saying he could "confirm" that Lopez Obrador told him last week he had "decided to reconsider" his nomination to head the bank.

While still serving as finance minister, Herrera was picked in June to succeed Bank of Mexico Governor Alejandro Diaz de Leon, whose term concludes at the end of 2021.

Neither Lopez Obrador's office nor the Finance Ministry immediately responded to requests for comment.

Ricardo Monreal, the Senate leader of Lopez Obrador's leftist National Regeneration Movement (MORENA), said the president's decision to pull the nomination was made in August, and that Herrera might still be a candidate for the bank's top job.

But after the unusual withdrawal announcement, one Mexican official said that prospect now appeared unlikely.

Neither Monreal nor Herrera explained why the former finance minister's name had been withdrawn.

Monreal said there was still time this year for the Senate to ratify whoever is proposed to take the top job.

The head of Mexico's traditionally autonomous central bank holds sway over borrowing costs in Latin America's second-biggest economy as well as managing inflation, which has been rising steadily this year beyond the bank's 3% target.

The unexpected turn of events over the central bank succession could rattle investors wary of politicization of the monetary authority, whose governor has straddled the terms of presidents from rival administrations in the past.

In July, Rogelio Ramirez de la O took over as finance minister following Herrera's nomination, in what had been seen as an orderly transition of the top economic policymakers.

Mexico's peso weakened on Tuesday to its lowest level against the dollar since March, as market bets that the U.S. Federal Reserve will hike interest rates next year continue to grow.

(Reporting by Diego Ore and Adriana Barrera; Additional reporting by Dave Graham; Editing by David Alire Garcia and Peter Cooney)