Peru Sol Drops Most in Two Years as Presidential Race Tightens

  • Currency declines after first monthly gain in almost two years
  • Poll shows Veronika Mendoza is gaining voters' support

The Peruvian sol declined the most in two years and shares fell as the nation’s presidential race tightened before the April 10 first-round election.

Peru’s currency weakened 1.1 percent to 3.347 per dollar, posting the biggest decline since August 2013, after a new poll showed Veronika Mendoza in a statistical tie for second-place with Pedro Pablo Kuczynski. The sol strengthened 6.4 percent in March, the first increase in 22 months. The country’s benchmark stock index, the world’s top performer this year, fell 1 percent as of 3:10 p.m. in New York.

Mendoza, a congresswoman from Cuzco who favors strengthening environmental laws in a country that depends on mining, has risen in the polls over the past month amid political turmoil that included two candidates getting barred from running and accusations that the leading contenders, Keiko Fujimori and Kuczynski, attempted to buy votes with food, beer and money. Mendoza’s interventionist approach to governing has investors worried, according to Alfonso Montero, chief investment officer at Credicorp Capital Colombia SA.

"If Mendoza were president, all of the markets would be overvalued," Montero said. "The best scenario would be Brazil and the worst is Venezuela."

The country boasts the world’s best-performing exchange-traded fund and its currency had surged to a five-month high.

The poll by Datum Internacional showed Fujimori leading with 36 percent of the vote, with Kuczynski at 16 percent and Mendoza, who left the ruling Gana Peru alliance in 2012 after a government clampdown on anti-mining protests, at 15 percent. Datum polled 1,511 people nationwide from March 28 to 30 and the error margin was plus or minus 2.5 percentage points.

"There’s a strong anti-Fujimori camp that has been activated as a result of these electoral decisions," said Alberto Vergara, a political scientist and lecturer at Harvard University. "This election will be decided by who commits the worst mistake."

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