Argentine Currency Crisis Forces Banks to Shut : Latin America: The economy minister and the Central Bank president resign as a jump in the dollar exchange rate forces the two-day closure.

Argentine President Carlos Saul Menem faced his second Cabinet crisis in a month Tuesday with the resignations of his economy minister and the Central Bank president, who failed to control a financially disruptive surge in the dollar exchange rate.

The government ordered all banks and exchange houses to close Tuesday.

Economy Minister Antonio Erman Gonzalez announced his resignation Monday night after a run on dollars increased the rate from 7,300 Argentine australes to 8,300 australes. Menem appointed Foreign Minister Domingo Cavallo to head the Economy Ministry.

Cavallo, 44, was attending a meeting of Latin American foreign ministers Monday in Venezuela when Menem called him back to Buenos Aires. An economist who did postgraduate studies at Harvard, Cavallo served briefly as president of the Central Bank in 1982. He is the fourth economy minister since Menem took office in July, 1989.

Cavallo said Tuesday night that he would authorize the Central Bank to intervene in the foreign exchange market to maintain the austral in the 8,000- to 10,000-per-dollar range. All other aspects of Gonzalez’s program will continue unchanged, Cavallo said, adding that banks and financial markets would operate normally on Wednesday.

Unconfirmed reports said Gonzalez would replace Guida di Tella as defense minister and Di Tella would take over as foreign minister. Di Tella became defense minister Jan. 14.

Gonzalez had held the economy position since December, 1989. Some business leaders criticized him because, they said, his anti-inflation policies were recessionary and his failed efforts to hold down the dollar exchange rate discouraged exports.

Congressman Juan Carlos Pugliese, a former economy minister, said Gonzalez’s resignation resulted from a “situation of discontent, distrust and lack of expectations in productive sectors.”

Javier Gonzalez Fraga, president of the Central Bank, and other high-ranking officials in the Economy Ministry also resigned.

The exchange rate, maintained artificially low during most of 1990, dropped below 5,000 australes to the dollar in December but rose rapidly in January despite government efforts to hold it down by selling off dollar reserves and setting high interest rates for austral deposits. The sale of $45 million in reserves Monday failed to keep the rate from soaring.

When Argentines invest heavily in dollars as a hedge against inflation, the resulting surges in the exchange rate often add to inflationary pressure because many businesses use the rate as an index for setting prices.

Inflation in 1990 was calculated officially at 1,344%, including a monthly rate of more than 90% in March. Government austerity programs and monetary measures reduced the monthly rate to 4.7% in December, the lowest in three years. The monthly rate for January will rise to more than 6%, according to official estimates.

In mid-January, after a series of corruption scandals, Menem replaced his ministers of labor, defense and health and dissolved the Ministry of Public Works. The dismissal of Public Works Minister Roberto Dromi and the expansion of Economy Minister Gonzalez’s portfolio to include public works sparked resentment of some other ministers against Gonzalez, according to press reports.