Left-wing candidate Pedro Castillo went to the head of Peru’s presidential election on Monday, encouraging Peruvian currency, stocks and bonds to fall short on expectations that he will seal a dramatic victory.
With 94 percent of the vote counted, Castillo had 50.1 percent to 49.9 percent for Keiko Fujimori, his rival – a difference of just 26,000 votes from a potential electorate of 24.3 million people. By Monday, Fujimori had had nearly 100,000 votes ahead.
Many of the remaining heights had to come from rural areas, where Castillo is the strongest. However, there have also been counts to be counted by Peruvians living abroad, which are likely to favor Fujimori.
“[It] it’s too close to call, but based on the vote count dynamics of the last few hours it seems to be leaning very little in favor of it. . . Castillo, ”said Alberto Ramos, head of the Latin American economy at Goldman Sachs.
The sun, which has depreciated sharply in recent weeks in anticipation of a possible Castillo victory, has lost more than 2 percent against the dollar to trade at about 3.90, an all-time low.
Peruvian stocks fell, with the overall S & P / BVL Peru index about 7 percent lower on the day in New York. The country’s dollar bonds have also come under pressure. A note that will mature in 2050 has seen its price drop about 2 percent to 129 cents on the dollar. Another dollar bond matured in 2031 has fallen more than 1 percent to 99 cents on the dollar.
“We anticipate volatility for Peruvian assets and note that protests against the results by both sides are a possibility given the tightness of the course,” Citibank said.
The elections were an extraordinary controversy between populists of opposite ends of the political spectrum.
Castillo is a rural primary school teacher who has become a left-wing crusader for the exploited, while Fujimori is the much despised daughter of former Peruvian authoritarian president Alberto Fujimori.
The prospect of a Castillo victory loomed panic and capital flight among the Peruvian elite. The sun is more depreciated against the dollar than any other currency in the world since first round of voting of April, when Castillo will emerge for the first time as a first boss. Dollar-sol transactions jumped about 20 percent last month.
Free Peru, Castillo’s party, is led by a Marxist who promotes nationalization, higher taxes, a new constitution and a brake on imports into one of the world’s largest producers of copper, zinc and precious metals. Fujimori, on the other hand, largely defends Peru’s economic model.
Castillo aroused the people in the poor and neglected villages of the Andes with a simple but powerful message: “There are no more poor people in a rich country.” Meanwhile, Fujimori’s offer to become the first woman president of Peru has been compounded by allegations of corruption that she denied.
The winner will not have a majority in Congress. Castillo’s party has 37 of the 130 seats in Peru’s unicameral parliament while Fujimori has only 24, although the house is full of other right-wing parties that could be ready to cut business with it and make a living Castillo difficult.