Peru Leftist Signals Victory With Almost All Votes Counted

Peru’s leftist presidential candidate Pedro Castillo indicated his party won Sunday’s election, his strongest comments yet about the result of a vote that has roiled markets in the South American country.

“According to the report of our representatives, we already have the official party count of the votes where the people have imposed themselves on this feat,” Castillo told followers outside his headquarters on Tuesday evening. He asked backers “not to fall into provocation” and said the business sector was showing support for the party.

Peru Leftist Signals Victory With Almost All Votes Counted

Investors seemed encouraged at the possibility there would be a clear result soon. The cost of insuring the nation’s debt against default over the next five years fell 4.6 basis points, the most in over a month, according to prices compiled by Bloomberg. The benchmark 10-year bond rose for a second day. The currency led gains among emerging-market peers, strengthening 1.9% to 3.85 per dollar.

Castillo leads Keiko Fujimori by 50.2% to 49.8% -- or a gap of nearly 69,000 votes -- with 99.8% of ballots counted. Fujimori has denounced some irregularities in the process, saying the rival party was “distorting or delaying” the results, but hasn’t yet provided evidence to back up her claim. Five years ago, Fujimori lost by a razor-thin margin in the 2016 runoff and has said that she regrets not seeking a recount then.

Peruvian markets rebounded Tuesday after Castillo sought to reassure investors concerned about his economic policies. In a statement Monday evening, he said would pay the country’s debt, preserve central bank independence and wouldn’t pursue nationalizations of key industries.

Fujimori hasn’t elaborated on what strategy she may pursue to potentially challenge the outcome. The electoral court is expected to meet Wednesday afternoon.

While the tight margin has fueled uncertainty and tension in the Andean country of 32 million people -- with the country nearly split in half, largely along rural and urban lines -- some in financial markets see a silver lining. Investors may be encouraged by the idea that neither candidate would have the political mandate to drastically overhaul one of South America’s steadiest economies.

Fujimori, who is under investigation for corruption and campaigned while out on bail, has vowed to save the country from “communism” by preserving a liberal economic model. She’s also promised to boost cash payments to families affected by the Covid-19 pandemic where more than 187,000 people have died, the highest per capita death toll in the world.

Castillo, by contrast, has pledged to increase taxes on mining and oil companies to invest on education and health. He blames the country’s inequality on the ruling elite whom he says has long been content to run Peru from Lima while ignoring large swathes of the country.

Castillo said that some foreign governments have already begun to congratulate him in private, without elaborating.

“We will be a government that’s respectful of democracy and the current constitution,” Castillo told supporters Tuesday evening. “We’ll be respectful and will be a government with financial and economic stability.”

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