Yields on Colombia’s peso bonds held at a record low after inflation slowed in June more than forecast, supporting fixed-rate securities.
The yield on Colombia’s 10 percent peso-denominated debt due in 2024 remained at 6.93 percent, according to the central bank, matching the lowest close since the securities were first sold in 2009, a level reached yesterday.
Consumer prices rose 3.20 percent in June from a year earlier after an increase of 3.44 percent in the previous month, the national statistics agency said in a report late yesterday. The median forecast of analysts in a Bloomberg survey was for a 3.32 percent annual inflation rate.
“Inflation confirms the economy is decelerating,” Julian Cardenas, head analyst at ING Pensiones y Cesantias, said in a phone interview from Bogota. “The inflation number is positive for bonds and also gives the central bank leeway if it needs to cut interest rates to stimulate growth.”
Colombia’s policy makers on June 29 held the overnight lending rate for a fourth straight month at 5.25 percent as growth cooled and prices of the country’s commodities exports dropped. Government reports in June showed industrial output and retail sales unexpectedly fell in April and the economy expanded 4.7 percent in the first quarter, its slowest pace since 2010.
The peso declined for a second day, dropping 0.5 percent to 1,784.55 per dollar, paring its rally this year to 8.6 percent, still the best performance among all currencies tracked by Bloomberg. The peso was little changed this week.
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