Peru Yields Fall as Stimulus Speculation, Currency Spur Demand

Peruvian bonds rose, pushing yields to a one-week low, after Federal Reserve policy makers signaled readiness to boost stimulus measures, spurring investor appetite for higher yielding, emerging-market debt.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due in August 2020 dropped one basis points, or 0.01 percentage point, to 4.58 percent, according to data compiled by Bloomberg. The price rose 0.09 centimo to 121.4 centimos per sol.

“There’s a growing sensation that the U.S. will expand quantitative easing,” said Hedmond Rios, a economist at Celfin Capital in Santiago. “Foreign investors are betting the sol will continue appreciating against the dollar and that’s helped push down yields, particularly in the middle of the curve.”

The sol was little changed at 2.6150 per U.S. dollar at today’s close, according to Deutsche Bank AG’s local unit. The currency touched 2.6110 on Aug. 21, the strongest level since 1997, data from Peru’s financial regulator show.

Peru’s central bank didn’t buy or sell dollars in the spot market today. The bank has purchased $785 million this month to slow the sol’s advance.

Many members of the Fed’s policy committee said further action would probably be needed “fairly soon” without evidence of “substantial and sustainable” improvement in the U.S. economic recovery, according to minutes of the July 31-Aug. 1 meeting published yesterday.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

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

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