Humala Sends Peru Nuevo Sol Crushing
The election victory by Ollanto Humala in the Peruvian elections was not taken well by traders, as the Peru nuevo sol lost a lot of ground against the U.S. dollar on Monday. At around 6:12 am GMT, the U.S. dollar traded around 2.7840 against the nuevo sol, or 0.83% above Friday's close.
Analysts are worried that Humala, once an ally of Venezuela's Hugo Chavez, might introduce more state control over the economy. The Peru economy has been booming recently but much of that growth did not seem to trickle down to the country's numerous poor, which formed the base of Humala's support.
Humala, who has been tightly defeated in last election by outgoing President Alan Garcia, has been working hard to distance himself from radical economics and Hugo Chavez. In this election, Humala has tried to portray himself as the disciple of the more moderate reformist approach of Brazil's Workers Party. More moderate Humala managed to obtain support from Peru's staunch critic of left-wing politics and current Nobel Prize winner for literature, Mario Vargas Llosa. It will take more time for Humala to convince the markets that he is the right man for the job, however.
Traders who believe Humala will fulfill his promise and stay away from radical economics, in order to maintain Peru's strong growth performance, will be interested in the iShares MSCI All Peru Capped Index Fund (NYSE: EPU).
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