Bloomberg News

Peru’s Humala May Maintain Central Bank President Velarde

June 07, 2011

(Adds trip to Venezuela in second paragraph, stock market in fourth.)

June 7 (Bloomberg) -- Peru’s President-elect Ollanta Humala said he will meet with central bank president Julio Velarde to decide whether to ask the official to continue at his post.

Humala told CNN en Espanol that he plans to travel to the U.S. and countries in the region including Venezuela, Brazil, Ecuador and Bolivia before taking office July 28. Humala said he has yet to choose his ministerial cabinet.

“We’re looking for figures who rather than party membership, have solid morals and generate confidence” among investors, Humala said in his first interview since winning the June 5 elections. “Velarde is a competent person who has done a good job over the years at his institution.”

The Lima General Index posted the biggest drop since at least 1990 yesterday after Humala, a former military rebel, defeated investor-friendly Congresswoman Keiko Fujimori, prompting the exchange to suspend trading for the first time since October 2008. The sol sank 0.9 percent to 2.7890 per U.S. dollar. Yields on dollar-denominated bonds due 2037 rose 19 basis points, or 0.19 percentage point, to 5.93 percent.

Yesterday’s decline on the stock market created buying opportunities, Humala said. Today, the Lima Index rebounded 7 percent to 19,881.10, while the extra yield investors demand to hold Peru dollar debt instead of U.S. Treasuries narrowed 19 basis points to 196. The Peruvian sol strengthened 0.1 percent to 2.7865 per U.S. dollar.

Emulating Lula

To appease voters concerned his proposals could destabilize the $153 billion economy, Humala distanced himself during the campaign from Venezuela’s Hugo Chavez, saying he would emulate the policies of former Brazilian President Luiz Inacio Lula da Silva. In a March 23 interview, Humala said he hasn’t visited Venezuela since 2006, when he appeared at a ceremony with Chavez.

Since being appointed in 2006 to head the central bank, Velarde, 58, has helped triple international reserves to a record $46 billion and raised lending rates to a two-year high to curb inflation, which has been the lowest in the region since 2006.

Velarde, who holds a doctorate in economics from Brown University, introduced measures including raising reserve requirements for bank deposits to rein in lending, which jumped 20 percent from a year earlier.

Peru’s courts will decide whether former President Alberto Fujimori, sentenced to 25 years for corruption and human rights abuses, will be transferred to a common jail from a police holding facility, Humala said.

Humala’s brother Antauro Humala, also serving a 25-year prison sentence for killing four policemen during the takeover of the southern highland town of Andahuaylas in 2005, will remain in prison, he said.

--Editors: Jonathan Roeder, Stephen West

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at


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