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EMERGING MARKETS-Economic growth helps Peru's sol brave post-election jitters

·3 min read

* Sol recovers after falling 1% * Brazil's real gains ahead of c.bank meet * Chile's peso tumbles on copper meltdown (Recasts, updates prices) By Susan Mathew and Ambar Warrick June 15 (Reuters) - Peru's sol currency recovered early losses on Tuesday after strong economic data offset uncertainty over the country's next president, while neighboring Chile's peso weakened as copper prices touched seven-week lows. The sol rose 0.3% after data showed Peru's economy grew by a staggering 58.5% in April, driven by a rebound in key mining and fishing sectors, as well as a low basis for comparison from last year, due to the COVID-19 pandemic. The currency had fallen as much as 1% earlier as investors awaited the results of the recent presidential election, with socialist Pedro Castillo clinging to a narrow lead that would tilt the country firmly to the left. That has prompted many urban elites to take money abroad. "At this moment the market is still vulnerable to the new rhetoric and policies that are coming from the (potential) new left-wing president," said BCA's chief emerging market strategist Arthur Budaghyan. "But still there is a very powerful congress in Peru," he said, highlighting that the last two Peruvian presidents had been impeached. "There will certainly be a left-wing bias in (Peruvian politics), but most major policies will probably be blocked." Peru local currency debt was the worst performer on Monday, with yields rising an average 15 basis points on the day, according to JPMorgan's GBI-EM index. The Chilean peso fell 1.1% to a two-week low as the prices of copper, the country's top export, retreated on fears of price curbs by major consumer China. An extension of restrictions to curb the spread of COVID-19 in Chile also weighed on sentiment. Meanwhile the dollar touched a one-month high on the eve of the U.S. Federal Reserve's policy decision, weighing on most emerging market currencies. Investors are seeking clues on whether the Fed has begun discussing tapering bond purchases and if policymakers are concerned about rising inflation, both of which can cause a flight away from emerging markets to safe havens. Brazil's real rose 0.6% ahead of a widely expected 75 basis-point interest rate hike by the central bank on Wednesday. In Suriname, a majority of bondholders have triggered a termination clause on the South American country's 2023 and 2026 notes, a creditor committee said on Monday. Suriname's 2026 bond was quoted at 61.5 cents on the dollar, down from 71 at the close on June 1, the day before Suriname's haircut proposal. Colombia's peso tumbled more than 1% in catch-up trade, after a long weekend. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1378.44 -0.34 MSCI LatAm 2664.05 -0.22 Brazil Bovespa 130022.12 -0.14 Mexico IPC 50844.13 -0.36 Chile IPSA 4378.62 0.78 Argentina MerVal 66278.49 -0.835 Colombia COLCAP 1252.52 -0.72 Currencies Latest Daily % change Brazil real 5.0433 0.55 Mexico peso 20.0622 -0.57 Chile peso 726.54 -1.06 Colombia peso 3695.75 -1.18 Peru sol 3.8798 0.28 Argentina peso 95.2800 -0.02 (interbank) (Reporting by Susan Mathew in Bengaluru, Marc Jones in London; Editing by Sujata Rao-Coverley, Jan Harvey and Sonya Hepinstall)