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Peru’s president declared a curfew in the capital Lima on Tuesday to stem violent protests against inflation that have intensified in recent days, leading to clashes with police, temporary food shortages and supply-chain disruptions.
President Pedro Castillo announced the measure in an address to the nation on Monday night, while declaring a state of emergency in Lima and the nearby port city of Callao. The curfew will run from 2 a.m. local time to 11:59 p.m.
He also called a meeting with the head of congress, Maria del Carmen Alva, and party leaders for 8 a.m. local time to discuss the situation, according to a statement from the presidential office.
Castillo survived a second impeachment attempt by congress on March 29 only to find another crisis brewing on the streets. Farmers and truckers staged protests against the rising cost of fuel and fertilizers last week, temporarily interrupting the supply of food to the capital. Over the weekend the president lowered fuel taxes and increased the minimum wage by 10% to help Peruvians struggling with the fastest inflation in 24 years. Yet the measures did little to appease bus drivers, most of them working informal jobs without fixed salaries, and who began a strike on Monday.
The government deployed the army on Monday after bus drivers blocked highways. The country’s agricultural exports, including blueberries, avocados and grapes, are now suffering disruptions, according to an association of exporters.
Peru’s dollar-denominated bonds due 2050, among the nation’s most traded, fell less than one cent to 126.4 cents on the U.S. dollar in early New York trading.
Peruvian local assets had a strong start to the year despite political headwinds. The sol, which hasn’t started trading on Tuesday yet, is the third best performer among major currencies this year, up 10% against the dollar. The nation’s stocks have gained more than 30% in dollar terms, ranking second among 92 benchmark indexes tracked by Bloomberg.
Lawmakers and senior officials will be able to work as normal during the curfew, and citizens in essential businesses including pharmacies and supermarkets will be allowed to move about the city, Minister of Justice Felix Chero said in an interview with Radio Exitosa. Yet Castillo’s decision is likely to further erode his popularity, according to Citigroup Inc strategists.
“We do not rule out a future push by congress to impeach the president,” Citi strategists including Dirk Willer wrote in a research report. “While the president had the votes to avoid being ousted two weeks ago, a new push down the line might have a different outcome if he loses support of congressional allies.”
Read More: Peru’s Fastest Inflation in 24 Years Is Castillo’s Latest Crisis
On Monday, even housewives angry with rising food costs joined the protests. Local media showed mini-markets being looted in the southern region of Ica and school classes were suspended until Tuesday amid the chaos.
Consumer prices in Lima rose 6.82% in March from a year earlier, the most since Aug. 1998, and much above the central bank’s target of 2%, plus or minus 1 percentage point. Prices climbed 1.48% from February, above the median forecast for a 0.92% increase in a Bloomberg survey of economists.
Peru’s central bank is expected to raise its benchmark interest rate by half a percentage point on Thursday to 4.5%, its ninth consecutive increase that has so far totaled 375 basis points of monetary tightening since August.
(Updates third paragraph with Castillo calling the head of congress and party leaders in the morning, adds market reaction and analyst comment starting in sixth paragraph.)
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