(Adds finance minister comments in paragraphs 8, 9, 10)
SANTIAGO, May 8 (Reuters) - Chile's peso currency
strengthened against the dollar on Monday, after right-wing
parties won a majority of seats in a new council that will lead
a redraft of the Andean country's dictatorship-era constitution.
The Sunday ballot, in which right-wing parties won 34 of the
50 seats on the council, marked a sharp shift from a progressive
majority that drafted a failed first constitutional rewrite, a
move economists see benefiting local assets at least in the
short term.
The peso was trading up 0.66% to 788.50/788.80 per dollar
following the results, although doubts remained over whether
dialogue between all parties would be achieved for a new draft
to garner enough popular support.
The constitutional advisers elected on Sunday will start
drawing up a new constitution in June, with voters approving or
rejecting it in December.
"The positive evolution of local assets in the medium-term
will depend on the ability of the Constitutional Council to
draft a constitution that can be approved in the next electoral
process," economists at Scotiabank said.
The first rewrite, drafted largely by independent and
left-wing constituents and considered one of the world's most
progressive constitutions, was rebuffed by voters in September.
Andres Abadia, Pantheon Macroeconomics' chief Latin America
economist, said the right-wing control of the council would lead
to lower political risks, helping to keep financial metrics
under control and supporting the local currency.
Speaking to reporters at a meeting of government ministers
in Santiago, Finance Minister Mario Marcel said he hoped the
result could lead to progress on tax reform that was previously
shelved by Congress.
"We believe that we can now reactivate conversations and
move forward in the dialogue process in a more structured way
surrounding tax reform," Marcel said, adding that this is an
opportunity to quickly "reduce economic uncertainty in the
country."
"Indefinite postponement of important topics like tax
reform, pension reform or the constitutional process helps no
one," Marcel said.
JPMorgan economists also said the results could be positive
for investments "if well managed", while noting the recent
pendulum behavior of Chilean voters was a warning signal in the
sense of settling the debate and allowing uncertainty to ebb.
"Our central scenario assumes the institutional design of
the new constitution process is to help offer a minimalist new
constitution so to gain enough popular support in December,"
they said.
"(But) political strategies ahead could offer surprises."
(Reporting by Froilán Romero, Gabriel Araujo and Natalia Ramos,
editing by Ed Osmond and Bill Berkrot)
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