Peru Yields Advance Most in Two Weeks as Falling Sol Saps Demand

Peruvian bonds fell, pushing up yields the most in two weeks, as declines in the sol curbed the appeal of assets denominated in the local currency.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 rose two basis points, or 0.02 percentage point, to 3.89 percent, according to data compiled by Bloomberg. The price fell 0.2 centimo to 125.63 centimos per sol.

The sol weakened for a second day as local banks boosted dollar holdings after policy makers increased lenders’ reserve requirements effective Jan. 1 to cool credit demand.

“There aren’t many dollars in the money market and that could hit the sol in the short term,” said Diego Llona, a bond trader at Banco Santander SA’s local unit. “That reduces demand for sol bonds.”

The sol depreciated 0.1 percent to 2.5485 per U.S. dollar at today’s close, according to prices compiled by Bloomberg.

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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