Bloomberg News

Colombian Yields Rise on Speculation Rate Cuts Over; Peso Gains

April 01, 2013

Colombian peso bond yields rose as Finance Minister Mauricio Cardenas said last month’s surprise half-point interest-rate reduction may bring to an end a cutting cycle that began in July.

Yields on peso bonds due 2024 climbed seven basis points, or 0.07 percentage point, to 4.97 percent at 9:47 a.m. in Bogota, according to the central bank. The price fell 0.819 centavo to 142.665 centavos per peso. Colombian markets were closed March 28-29.

Policy makers accelerated the pace of borrowing-cost cuts on March 22 when they lowered the target lending rate by 50 basis points to 3.25 percent, surprising most analysts, who expected a 25 basis point cut. They have reduced the key rate 2 percentage points since the beginning of cuts in July.

“It does look like we’ve reached the end of the easing cycle,” said Daniel Lozano, the head analyst at Serfinco SA brokerage in Bogota. “That goes against the view of some who are still expecting more cuts.”

The peso appreciated for a second straight day, advancing 0.1 percent to 1,823.79 per U.S. dollar. It has slumped 3.1 percent this year.

Colombia is “getting close to the end of what the central bank can do in terms of cutting its interest rates,” Cardenas, who is also president of the monetary authority’s board, said on RCN Radio today. He also said he expects the peso to weaken toward 1,900 and hopes “we get there quickly.”

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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