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Peru's new Marxist PM says 'don't worry' as chances of radical policy shift rise

Peru was mired in uncertainty on Friday as bonds tumbled and the local currency weakened after newly-elected Socialist President Pedro Castillo appointed hard-left Marxist as prime minister while the key post of finance minister remained vacant.

Peru's new Marxist PM says 'don't worry' as chances of radical policy shift rise

FILE PHOTO: Peru's President Pedro Castillo walks out the Congress after his swearing-in ceremony, in Lima, Peru July 28, 2021. REUTERS/Angela Ponce/File Photo

LIMA: Peru was mired in uncertainty on Friday (Jul 30) as bonds tumbled and the currency hit a low after newly-elected socialist President Pedro Castillo appointed a hard-left Marxist as prime minister while the key post of finance minister remained vacant.

Guido Bellido was named prime minister on Thursday, dimming investor hopes that Castillo would choose moderate policies.

Most of the rest of the cabinet was also sworn in, but the lack of an economy czar is likely to create uncertainty in markets already rocked by a campaign in which Castillo described himself a Marxist-Leninist.

"Don't worry. Everything's going to be fine," Bellido said in brief comments to reporters.

Markets were not reassured. The local sol currency fell over 3 per cent to an all-time low of 4.055 to the dollar. Peruvian sovereign bonds crashed and the country's benchmark stock index dropped more than 4 per cent, and was on track to close at its lowest since November.

Castillo, inaugurated on Wednesday, took to Twitter in the early hours of Friday to defend his new government.

"Our cabinet belongs to the people. It answers to the people," Castillo wrote.

"Our commitment is to Peru and to no other interest than to dedicate each and every one of our efforts to build a more just, free and dignified country. We will not disappoint your trust."

Investors are growing wary about Peru's prospects under Castillo, who won last month's election against conservative Keiko Fujimori by a thin margin. After a campaign in which his pledges to distribute wealth more evenly had spooked investors but won him votes from Peru's rural poor, he had in more recent weeks appeared to take a more moderate tack.

His failure to appoint a finance minister exacerbated investor concerns, JPMorgan said in a note.

Sources close to Castillo before his swearing-in had said the economy minister role would likely go to Pedro Francke, a moderate left-leaning economist, who had helped soften the outsider candidate's image.

Source: Reuters/ec

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