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Colombia’s peso bond yields held at a one-week low after the central bank maintained its growth forecast yesterday while refraining from increasing borrowing costs.
“Local fundamentals remain strong,” said Pedro Ospina, a fixed-income analyst in Bogota at Interbolsa SA, the country’s biggest brokerage. “Tax revenue is high, inflation is under control and the central bank hasn’t changed its growth forecast.”
The yield on the country’s 10 percent peso-denominated debt due in July 2024 was little changed today at 7.14 percent, according to the central bank. That’s the lowest on a closing basis since May 22.
Colombia’s central bank voted unanimously yesterday to keep the overnight lending rate at a three-year high of 5.25 percent, matching the forecast of all 26 analysts surveyed by Bloomberg. While citing European debt turmoil in the decision to hold rates steady, policy makers maintained a forecast for growth of about 5 percent this year after the economy expanded 5.9 percent in 2011.
Banco de la Republica will probably leave borrowing costs unchanged through the remainder of the year, according to Ospina. It has raised the target rate nine times since February 2011 from a record low 3 percent.
Colombia’s peso rose, following gains in global stocks, amid data showing stabilization in the U.S. housing market and after Greek opinion polls eased concern the country will leave the euro.
The currency gained for a fourth straight day, appreciating 0.7 percent to 1,814.70 per U.S. dollar. It has jumped 6.8 percent this year, the best performance among all currencies tracked by Bloomberg.
“Markets are in a wait-and-see mode regarding Europe,” said Julian Marquez, an analyst at Interbolsa. “Today the mood is more positive” pushing gains in the peso, he said.
Increased dollar flows into Colombia, as companies buy pesos before a June 25 tax deadline, are also helping drive gains in the local currency, Marquez said.
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