Peru presidential race tightens, markets cheer

Peru's right-wing presidential candidate Keiko Fujimori is closing in on leftist rival Pedro Castillo ahead of a 6 June run-off ballot, buoying financial markets.

The newest poll by CIT published today has the race virtually tied, with 38.2pc for Castillo and 37.3pc for Fujimori. The CIT poll, as well as three others published in recent days, found roughly a third of the electorate to be undecided or intending to cast a blank or spoiled ballot.

The stakes for investors across numerous commodities are high. Peru is the world's second leading copper producer and is South America's only LNG exporter.

Initial support for Castillo, a rural schoolteacher, has flattened since his surprise first-place victory in 11 April elections. If elected, Castillo says he would scrap Peru's 1993 constitution and review tax agreements that have underpinned investment in mines and energy projects for nearly 30 years. His Peru Libre party would nationalize strategic resource sectors.

Fujimori is the daughter of former president Alberto Fujimori, who ran Peru in the 1990s and was later jailed for human rights violations in his campaign to crush the Maoist Shining Path movement. If Keiko prevails next month, she would pardon him. She calls for tweaking legislation, including a plan for direct payments to residents who live in mining zones. Despite dogged accusations of corruption and a populist streak, Fujimori is the favorite of Peru's business community.

Brighter sol

The Peruvian sol appreciated by 2.36pc yesterday, its best daily performance in five years, and was up 1.1pc in early trading today.

The Peruvian stock market jumped by 3.87pc yesterday, following a 3.37pc increase on 7 May, erasing all losses for the year to date.

Mining stocks, which dominate the local bourse, were up strongly on the back of the polls, and the surge in base metal prices.

By Lucien Chauvin