Peru's Presidential Election Too Close To Call, Though Castillo Has A Narrow Lead

• In the second round of Peru’s presidential election held on June 6, leftist Pedro Castillo currently holds a narrow lead of 50.2%, over right-wing candidate Keiko Fujimori, who has received 49.8% of the vote, with approximately 95.0% of the vote counted. Castillo, who finished first with 18.9% of the first-round vote on April 11, consistently held polling leads since mid-April. 
• Fitch Solutions expected Castillo would win the presidency, and the extremely close vote tallies are in line with expectations and previous run-off elections in Peru. In 2011 and 2016, Ollanta Humala and Pedro Pablo Kuczynski won in the second round with less than 52.0% of the vote, with both candidates defeating Keiko Fujimori. 
• This suggests enduring polarization within the Peruvian electorate and the ongoing disapproval of Keiko Fujimori and the popular force (FP) among a large chunk of the voting population, though concerns over Castillo's left-wing platform likely prompted some voters to back Fujimori.  
• If Castillo is confirmed as the winner, it will pose significant risks to policy continuity, as Castillo campaigned on uprooting the country’s business-friendly economic model and raising taxes and royalty rates on extractive sector companies. If Castillo maintains his lead, Peruvian assets will also likely sell off further, exacerbating the Peruvian sol (PEN)'s recent depreciation to historic lows against the US dollar in Q2 2021.

(Source: Fitch Solutions)