Peru Stocks Rise as Velarde Appointment Encourages Investors
Peru’s benchmark stock index rose for a third session as investors bet President-elect Ollanta Humala will appoint an investor-friendly finance minister after retaining Central Bank President Julio Velarde in his post.
The Lima General Index rose 3.2 percent to 21,963.55, adding to a 4.6 percent gain yesterday. The increase was led by Canadian zinc exploration company Rio Cristal Resources Corp. (RCZ) and construction company Grana y Montero SA. (GRAMONC1) Velarde will serve another five-year term to help ensure economic stability, Humala said July 17.
“Investors are feeling optimistic that Humala will put a good economic team in place,” said Gustavo Urrutia, the chief economist at brokerage Inteligo SAB in Lima. “Velarde’s appointment was a sign the government will continue sound macroeconomic policies.”
Humala, who takes office July 28, is seeking to reassure investors concerned that his plans to impose a mining windfall tax may slow private investment. Since being appointed in 2006 to head the central bank, Velarde, 59, has helped triple international reserves to a record $47 billion and raised lending rates to a two-year high in May to curb inflation, which has been the lowest in the region since 2006.
The Peruvian sol was little changed at 2.7370 per U.S. dollar, from 2.7375 yesterday, according to Deutsche Bank’s local unit. The central bank bought $194 million on the spot currency market today.
The extra yield investors demand to hold Peruvian bonds instead of Treasuries, or spread, narrowed to 1.71 percentage points today, according to JPMorgan Chase & Co.’s benchmark emerging-market index.
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