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Peru Yields Hold at Record Low as Stable Sol Draws Investors

Peru’s local government bond yields held at a record low as the fastest-growing economy and most stable currency in the region attracted investors looking for relative safety.

The yield on the country’s 7.84 percent bonds due in 2020 was unchanged at 4.54 percent, matching the record low reached on July 16 for a second day, according to prices from Citigroup Inc.’s local unit. The sol depreciated 0.2 percent to 2.6290 per U.S. dollar, according to prices from Deutsche Bank AG’s local unit.

Peruvian bond yields have fallen in line with yields on U.S. Treasury bonds and other regional benchmarks such as Brazil’s 8.5 percent real debt due in 2024, which fell to a record low of 6.49 percent on July 27. The sol is the least volatile major currency in Latin America and annual inflation decelerated in July to the slowest in more than a year, reducing the risk that investments in local bonds will depreciate.

“There’s a bit of a flight to quality,” said Bret Rosen, a local markets strategist at Standard Chartered in New York. “Economic growth is strong, inflation had been low and there is so little volatility in the Peruvian sol that when investors are looking for somewhere to allocate in Latin America, Peru has very little currency risk.”

Peru’s central bank didn’t intervene in the currency market today, it said on its website.

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net

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

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