SANTIAGO, Dec 15 (Reuters) – The Chilean peso strengthened against the U.S. dollar on Monday after right-wing hardliner Jose Antonio Kast was elected president in a commanding runoff win against leftist candidate Jeannette Jara.
While the market had largely priced in a Kast win, his margin of victory – some 16 percentage points – gives him momentum to press ahead with policy changes, and was bound to impact the peso and stock market, said Jorge Selaive, chief economist of Scotiabank Chile.
His economic plan involves more flexible labor laws, corporate tax cuts, less regulation, and deep spending cuts. He will take over in March from leftist President Gabriel Boric.
He has said he will seek to encourage investment in the copper industry in the world’s no.1 supplier, but has indicated no plans for major changes to its governance.
The Chilean peso strengthened slightly against the dollar on Monday, while the IPSA stock index gained 0.1%, continuing their recent rally as investors have bet on a Kast win and more market-friendly policies.
However, his fiscal plans and the likelihood of lower copper prices skewed towards slower economic growth next year, Capital Economics said in a note on Monday.
Kast ran his campaign on a law-and-order platform, and has pledged a crackdown on rising crime and a tougher stance towards unchecked migration at Chile’s porous northern border.
While there is broad political support to tackle security issues, Kast will need to work with a Chilean Congress that is divided and may not support his more radical proposals. The Senate is evenly split between left- and right-wing parties, while the swing vote in the lower legislative body belongs to the populist People’s Party.
“We are going to work tirelessly to recover tranquility, to recover order, to recover growth and to recover hope because Chile has given us a clear mandate that admits no excuses,” Kast said in his victory speech at his party headquarters on Sunday evening.
(Reporting by Froilan Romero, Fabian Cambero, and Gabriel Araujo; Writing by Rosalba O’Brien; Editing by Bernadette Baum and Chizu Nomiyama )
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