Redrado maintains that the bank's charter stipulates he can only be removed by Congress.
Fernandez had ordered the central bank to use about $6.6bn in reserves to help cover $13bn in international debt falling due this year.
Opposition legislators and other critics accused Fernandez of violating the bank's autonomy by ordering it to use reserves to pay the debt, saying it could lead to a sharp increase in government spending.
Aldo Abram, director of the private economic think-tank, the Centre for Investigating Institutions and Markets of Argentina, said the central bank's original charter establishes its independence.
"That is, it doesn't take orders from [the executive] nor are its employees part of the government. Therefore, the president cannot seek their resignations," he said in a statement.
Fernandez's government argued that since it is ultimately the president's decision, skipping congressional action and firing Redrado directly was legal.
"There is no conflict of powers," Amado Boudou, the economy minister, said.
Redrado was replaced by Miguel Pesce, the central bank vice-president, who will serve as interim president.
Pesce is a government ally and in comments to the state-run Telam agency, he signalled he would move ahead with the debt repayment fund.
"The only thing left to do is to implement [the president's order]", he said.
Fernandez's administration says it is trying to clear up the country's debt problems so that it can return to international credit markets that have been closed to it since a 2001 default on debt payments.
Argentina's debt obligations rise steeply this year to $13bn, and economists estimate a funding gap of $2bn to $7bn.