Colombia’s peso bonds fell, pushing yields higher for a second day, on speculation the central bank will raise rates in the first half of the year to ease inflation.
The yield on the country’s 11% benchmark bonds due in July 2020 rose two basis points, or 0.02 percentage point, to 8.57% at 9:33AM New York time, according to Colombia’s stock exchange. The price fell 0.129 centavo to 116.275 centavos per peso.
Policy makers will leave the overnight lending rate unchanged at a record low of 3.5% when they meet January 29, according to all 12 economists in a Bloomberg survey.
“Investors are betting the central bank will raise rates in April and since the bankers meet this week that generates volatility in the bond market,” said Carmen Salcedo, a fixed- income analyst at Corp. Financiera Colombiana SA in Bogota. Salcedo predicts the central bankers will raise rates starting in the second half of the year to 4.25% by year-end.
Colombia’s peso rose 0.4% to 1,960.20 per dollar from 1,968.90 on January 22. The peso has jumped 4.3% so far this year, the biggest gain among a basket of 26 emerging-market currencies tracked by Bloomberg.
Banco de la Republica isn’t considering discretional dollar buys to weaken the peso, board member Juan Pablo Zarate said in an interview with Bogota-based newspaper Portafolio.
(Andrea Jaramillo, Bloomberg)