Bloomberg News

Peru Bonds Advance After Consumer Prices Decline: Lima Mover

February 02, 2012

Feb. 2 (Bloomberg) -- Peruvian bonds gained after consumer prices fell the most in 15 months, spurring speculation the central bank will cut interest rates to bolster the economy.

The yield on the nation’s benchmark 7.84 percent sol- denominated bonds due August 2020 fell one basis point, or 0.01 percentage point, to 5.66 percent at 1:10 p.m. in Lima, according to prices compiled by Bloomberg. That’s the lowest yield since Dec. 2. The security’s price gained 0.08 centimo to 114.54 centimos per sol.

Peruvian consumer prices fell 0.1 percent last month, the most since October 2010, as food costs declined, the government said yesterday.

“The central bank is probably evaluating more earnestly a cut in rates, although there’s nothing imminent,” said Manuel Aldave, head of investments at Banco Internacional del Peru in Lima. “The inflation data reinforces the view that the bank will probably lower rates” by as much as 75 basis points this year, he said.

Central bankers are scheduled to next meet to set interest rates on Feb. 9. They kept the benchmark rate at 4.25 percent for an eighth straight month on Jan. 12.

The sol was little changed at 2.6890 per U.S. dollar, from 2.6895 yesterday, according to Deutsche Bank AG’s local unit.

--Editors: Richard Richtmyer, David Papadopoulos

To contact the reporter on this story: John Quigley in Lima at

To contact the editor responsible for this story: David Papadopoulos at

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