Christine Lagarde has been selected by the executive board of the International Monetary Fund to fill the post of Managing Director vacated by Dominique Strauss Kahn.

The race ended up as a straight battle between Lagarde and Mexico central bank Governor Agustin Carstens, but the French Finance minister all but secured the job after she gained the endorsement of the United States.

David Hawley, IMF spokesman, said: "The International Monetary Fund (IMF) has today selected Christine Lagarde to serve as IMF Managing Director for a 5 year term starting on July 5th.

"The Board looks forward to working with Ms Lagarde and her effectively leading the institution as its next Managing Director."

She succeeds Dominique Strauss-Kahn, who resigned as Managing Director in May to prepare his defence against criminal charges of sexual assault against a New York hotel maid.