Colombia’s economy expanded 7.5 percent in 2007, the fastest pace since 1978. Foreign direct investment rose 40 percent to $9.03 billion last year. In the year through March 19, it has increased 25 percent to $2.16 billion, according to the central bank.”Strong investment inflows are maintaining expectations the peso will continue its appreciating trend,” said Alvaro Camaro, chief analyst at Stanford Financial Group’s unit in Bogota.Colombia’s peso advanced 0.5 percent to 1,800.4 per dollar at 5:35 p.m. New York time, from 1,808.5 yesterday, according to the Colombian foreign-exchange electronic transactions system, known as SET-FX. It touched 1,794.5, its strongest level since July 7, 1999.The nation’s borrowing costs declined at a local peso debt auction today as speculation inflation will ease boosted demand for fixed-rate securities. The yield on Colombia’s bonds due October 2015 dropped to 11.27 percent from 11.64 percent at the last auction on March 26, the Finance Ministry said. The government sold fixed-rate securities due October 2018 and May 2011 for the first time.Economists this month cut their median forecast for 2008 inflation to 5.15 percent from 5.2 percent the prior month, according to a central bank survey released this week. Annual inflation slowed to 5.9 percent in March from 6.4 percent in February. That rate exceeds the central bank’s 3.5 percent to 4.5 percent annual target range.”Expectations inflation will slow is leading to increased appetite for the bonds,” said Camaro. Slowing inflation preserves the value of bonds’ fixed payments.The yield on Colombia’s benchmark 11 percent bonds due July 2020 rose 1 basis point to 11.22 percent, according to Colombia’s stock exchange. A basis point equals 0.01 percentage point. The price fell 0.064 centavo to 98.447 centavos per peso.