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Peru's Markets Defy Political Turmoil

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  Published in Politics and Government on Friday, February 20th 2026 at 7:42 GMT by reuters.com
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LIMA, February 20th, 2026 - Peru finds itself once again grappling with political uncertainty as lawmakers push forward with impeachment proceedings against President Dina Boluarte. Yet, surprisingly, the nation's financial markets have exhibited a remarkable degree of composure, defying the historical pattern of investor panic that typically accompanies such upheaval. The Peruvian sol and the Lima stock exchange have remained remarkably stable, even as the specter of another leadership change looms large.

Boluarte is facing accusations of "moral political incapacity," stemming from a confluence of perceived policy failures and unpopular decisions. While the specifics of these accusations remain a subject of heated debate, they have galvanized opposition forces in Congress, leading to the current impeachment motion expected to be debated and voted upon next week. Should the motion succeed, Peru would embark on yet another succession process, potentially ushering in a new, though likely interim, president.

For years, Peru has been plagued by a cycle of presidential instability - a "revolving door" presidency that has often sent shockwaves through the investment community. However, this time, the response has been markedly different. The resilience of the sol, and the relative steadiness of the stock market, suggest a shifting dynamic in how investors perceive the country's political risk.

"The markets have, to a large extent, priced in this political instability," explains Alonso Garcia, an economist at Consultpa in Lima. "There's a degree of resignation, but also the belief that Peru's economic fundamentals are sound enough to weather the storm." This assessment highlights a crucial point: Peru's economic strength is no longer solely reliant on the personality or policies of its president. Years of deliberate interventions by previous administrations, aimed at bolstering economic stability during times of political turbulence, appear to be paying dividends.

Peru's robust mining sector, a cornerstone of its economy, continues to perform strongly, fueled by consistent global demand and high commodity prices. This sector, largely insulated from the immediate political drama, provides a significant buffer against economic downturn. The ongoing strength in commodity markets offers Peru a valuable cushion, allowing it to absorb political shocks with greater ease.

However, analysts are quick to caution against complacency. While the current calm is reassuring, the underlying situation remains precarious. Prolonged or escalating instability could easily erode investor confidence, triggering capital flight and stifling economic growth. Carlos Lozada, a strategist at Macroconsult, underscores this risk: "The political risk remains a significant overhang. It's a constant worry, and any escalation in the political crisis could easily derail the recovery."

The uncertainty surrounding potential replacements for Boluarte further complicates the outlook. With no clear frontrunner emerging, investors are hesitant to make significant long-term commitments. The lack of a readily identifiable successor adds to the sense of apprehension, as the direction of future economic policy remains unclear.

This current situation is indicative of a broader trend in emerging markets - a growing disconnect between political instability and economic performance. While political turmoil remains a concern, investors are increasingly focusing on underlying economic fundamentals, such as debt levels, inflation rates, and commodity prices. In Peru's case, the strong foundations built over the past decade are providing a degree of insulation that was previously lacking.

Looking ahead, Peru faces a critical juncture. Navigating the impeachment process smoothly, and establishing a clear path towards political stability, will be crucial for sustaining economic momentum. The ability to attract foreign investment, particularly in the mining sector, will depend heavily on restoring investor confidence and demonstrating a commitment to sound economic governance. The coming weeks will be pivotal in determining whether Peru can break free from its cycle of political instability and unlock its full economic potential. The impeachment vote is not just a political event; it's a test of Peru's resilience and its ability to adapt to a new era of economic pragmatism, even amidst persistent political challenges.