Investors who chose to distance themselves from Peru in the face of political turmoil aggravated by the arrival of peter castle to the Government – as the icing on the cake after the tensions generated by the presidential scandals since 2020 – have once again viewed our market with enthusiasm thanks to the fact that we have the fastest and most solid economic growth in the region and because of the higher interest rates that will boost the recovery of the sun, highlighted Bloomberg.
The agency underlines that the Peruvian currency rose 3.7% so far in January, and raised its recovery from its record low of September 30 to 7.2%. its best figure after months of concern about an eventual “damage to the business climate” by Castillo.
Likewise, it is recalled that local actions also exceed most countries of the same size, accumulating an increase of 11% together with short-term national bonds while the BCRP controls inflationary risks by raising reference interest rates.
Brendan Mckenna, a strategist at Wells Fargo in New York, told Bloomberg that “As long as Castillo’s comment doesn’t affect confidence at the moment, the sun’s run shouldn’t be interrupted by political noise.”
Along these lines, they argue that calm has been generalized since the beginning of December, when Congress rejected a motion to initiate a process of impeachment against President Castillo due to accusations of corruption.
Also, Eduardo Jiménez of Macroconsult, emphasized that the Peruvian economic fundamentals are good and justify the appreciation of the currency. “To the extent that the government renounces severe changes in the economic system, the sun will follow its foundations,” he said, in addition to estimating that the sun will strengthen to S/ 3.8 per dollar by the end of the year.
However, Bank of America economist Alexander Muller considers that “if more evidence appears incriminating Castillo, we believe that this would move the markets”, so waiting for political stability in Peru could be a risky bet since they drag disputes between Congress and the Executive that have shaken the country in recent years.
Finally, Bloomberg emphasizes that investors will continue to pay attention to the changes in the cabinet chaired by Mirtha Vásquez, giving as an example the rumors about a replacement for Pedro Francke (MEF), which was dispelled by the premier in the face of the solid economic performance that guarantees stability now.
“The political noise may return, but the bar is higher” when it comes to damaging the sun,” said Alejandro Cuadrado, head of foreign exchange strategy for Latin America at Banco Bilbao Vizcaya Argentaria SA in New York.
Source: Bloomberg
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