Colombian Peso Rallies After Landslide for Duque in Primary

(Bloomberg) -- The Colombian peso rallied the most in emerging markets after Ivan Duque, a candidate viewed as friendly toward investors, won a presidential primary by a landslide while his party picked up the largest number of seats in congress.

With 99 percent of polling stations reported, Senator Duque’s Democratic Center party was on course to win 19 seats in the 108-member senate, and 32 in the lower house. Duque, an ally of former President Alvaro Uribe, opposed the recent peace accord with Marxist rebels and is pledging to slash taxes on companies.

“Given the strong performance of Mr. Duque and his party, and the fact that he is likely seen as the most market-friendly presidential candidate, we expect Colombian assets to rally Monday,” Goldman Sachs analyst Paulo Mateus wrote in a research report published before markets opened.

The peso’s 0.6 percent gain against the dollar at 9 a.m. local time was the most among 24 major emerging market currencies tracked by Bloomberg.

Duque had been neck and neck in polls with the leftist former Mayor of Bogota Gustavo Petro, but Sunday’s results make him the favorite to be the nation’s next president, according to Alvaro Forero, a political analyst at Bogota’s Leadership and Democracy Foundation. Before receiving Uribe’s backing, Duque was unknown to most Colombians.

“This gives him momentum and makes him look like the candidate to beat,” Forero said in a phone interview. “There is no doubt that he’s taken the lead in the election race.”

Duque’s 4 million votes in the primary gave him about 68 percent, to 26 percent for former Defense Minister Marta Lucia Ramirez and 6 percent for former Inspector General Alejandro Ordonez. After his victory, Duque named Ramirez as his running mate.

Uribe himself won 876,000 votes in his Senate run, the most ever. Radical Change, the party of former Vice President German Vargas Lleras, saw a surge in support and was on course to win 16 Senate seats. The Green Party and Petro’s “Decency Coalition” also gained seats, while support plunged for President Juan Manuel Santos’ “U” Party.

Former Guerrillas

The former guerrillas of the FARC, who handed in their weapons last year, got 0.3 percent of the vote. Despite this, they’ll still have five seats in each house under the terms of the peace accord.

Duque is likely to drag his feet on implementing the peace accords if he becomes president and may seek a pretext to extradite the group’s leaders to the U.S., according to Adam Isacson, a Colombia expert at the Washington Office on Latin America. That, and the group’s weak showing in the election may cause more of its members to join the dissidents who are still fighting the government, he said.

Petro won the day’s other primary with 2.8 million votes, or 85 percent. Colombians vote in the first round on May 27 with a likely runoff in June.

To contact the reporter on this story: Oscar Medina in Bogota at omedinacruz@bloomberg.net.

To contact the editor responsible for this story: Matthew Bristow at mbristow5@bloomberg.net.

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