Peru Bonds Head for Best Weekly Gain Since July on Sol Outlook

Peru’s sol-denominated bonds headed for their biggest weekly advance in two months as rising metal prices boosted the outlook for the Andean nation’s currency.

The yield on the benchmark 7.84 percent sol-denominated bond due August 2020 fell three basis points, or 0.03 percentage point, to 4.19 percent at 12:24 p.m. in Lima, according to prices compiled by Bloomberg. The price rose 0.20 centimo to 124.17 centimos per sol. The yield has dropped 19 basis points this week.

The sol strengthened today for the first time in a week as copper climbed on speculation European officials will unveil a bailout plan for Spain as early as next week, easing concern that metal demand will slow. Gold and silver also rose. Metals, led by copper and gold, account for about two-thirds of Peru’s exports.

“Investors are buying bonds in the short end of the curve purely as a play on the currency,” said Alberto Jabiles, a trader at BBVA Banco Continental in Lima. “High commodity prices are going to help the economy and represent real export flows. Investment also remains strong, which means more dollar inflows.”

The sol appreciated 0.1 percent to 2.6 per U.S. dollar, according to Deutsche Bank AG’s local unit. The currency has weakened 0.2 percent this week after touching 2.5950 on Sept. 14, the strongest level since 1997, data from Peru’s financial regulator show.

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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