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Peru Currency Sells Off With Power Vacuum and Split Congress

Peru Congress Votes Against Naming Rights Activist as Leader

Peru’s currency tumbled to an all-time low as unprecedented political gridlock left the nation without a president, interim leader or head of congress.

After a weekend of anger and violence, lawmakers were unable to agree on a new temporary leader in a session late Sunday. They are set to vote Monday afternoon on a candidate to replace Manuel Merino, who lasted just six days as Peru’s interim president.

Francisco Sagasti, a lawmaker with the centrist Purple Party, is the only candidate.

The Purple Party opposed the impeachment of popular incumbent Martin Vizcarra last week. His ouster prompted the largest street protests in decades and ultimately forced his successor Merino to resign.

Peru Currency Sells Off With Power Vacuum and Split Congress

Sagasti has held posts at the World Bank and United Nations and is seen as a conciliatory figure. He’s been a consultant on science and technology for companies and governments and is running on the ticket of presidential candidate Julio Guzman in April’s election. The single-chamber congress voted down a proposal to name leftist lawmaker Rocio Silva to form a new government on Sunday.

“Congress had in its hands a path to the solution of this political crisis that they created,” Maria Antonieta Alva, who was finance minister under Vizcarra, said via Twitter after the vote. “They’ve turned their back on the country again. Irresponsible!”

The Peruvian sol fell 0.7% to a record low of 3.6680 per dollar at 1:25 p.m. in Lima, leading losses among Latin American currencies. It is down 2.3% since Nov. 9, when Vizcarra was impeached. Bonds due in 2050 dropped 2.3 cents to 156.6 cents on the dollar and were among the worst performers in emerging-market sovereign dollar notes, according to data compiled by Bloomberg.

Peru’s Constitutional Court is meeting Monday to discuss Vizcarra’s impeachment on the grounds of “permanent moral incapacity.” The court won’t consider reinstating him as president, RPP radio reported. A ruling is expected later this week.

Peru Currency Sells Off With Power Vacuum and Split Congress

Divisions in congress are deepening a political crisis that began last week with the sudden change of government just five months before a general election. Lawmakers pressed for the ouster of Vizcarra -- a popular leader who had a strained relationship with the legislature and lacked a political party to defend him -- despite polls showing that only one in five of Peruvians supported the measure.

“At this time, when the country is experiencing one of its biggest political crises, I want the whole country to know that I’m presenting my irrevocable resignation,” Merino said in a televised address earlier on Sunday.

Vizcarra was impeached over allegations of bribery, another chapter in a long history of scandals surrounding the country’s leaders. The political turmoil could cloud prospects for elections due in April, and further hamstring an economy that contracted 30% in the second quarter because of the Covid-19 pandemic.

Move Cheered

Merino’s resignation was greeted with cheers from demonstrators in the streets of Lima and other cities, according to video broadcast on Canal N. Others stood at their windows banging pots with spoons, as they have done every night since the Nov. 9 impeachment vote, though this time they were celebrating not protesting.

Thousands of Peruvians, many of them university students, defied social-distancing rules and marched through the center of Lima on Saturday to call for Merino to quit.

While the demonstrations were largely peaceful, there were some violent clashes with police, and two men died from gunshot wounds.

Further political gridlock and protests threaten to hamper the fight against the coronavirus in Peru, home to one of the world’s highest per-capita death rates from Covid-19. The country of 32 million people has reported about 935,000 cases and more than 35,000 deaths from the pandemic.

©2020 Bloomberg L.P.