Argentina's Merval stock index is dropping nearly 9 percent in a sell-off sparked by the naming of a new central bank chief who many believe will favor interventionist policies.

The index was falling 8.5 percent at 10,536 points in Thursday afternoon trade.

Traders expect that new central banker Alejandro Vanoli will order even more restrictive currency controls to stem capital flight and try to boost Argentina's frail economy.

Juan Carlos Fabrega resigned Wednesday after President Cristina Fernandez publicly criticized the monetary institution for allegedly leaking inside information that led to a steep drop in the peso.