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Colombia’s Yields Fall on Slowing Inflation Outlook; Peso Drops

Colombia’s peso bond yields declined for a third day on speculation inflation slowed last month below the central bank’s target range, supporting appetite for the fixed-rate securities.

Yields on peso bonds maturing in 2024 decreased one basis point, or 0.01 percentage point, to 4.98 percent at 9:54 a.m. in Bogota, according to the central bank. The yields dropped to 4.97 percent on Feb. 22, the lowest level since the securities were issued in 2009.

“The market is pricing in low inflation,” Jorge Cardozo, an analyst at Corredores Asociados brokerage in Bogota, said in a phone interview. “Inflation will likely be the driver today and tomorrow ahead of the report.”

Annual inflation slowed to 1.89 percent in February, according to the median forecast of 19 economists surveyed by Bloomberg before tomorrow’s government report. The rate slowed to 2 percent in January, at the bottom of the bank’s target range of 3 percent plus or minus one percentage point.

Inflation cooled even as the central bank lowered the target rate by 1.5 percentage points beginning in July, the most among emerging markets after Hungary.

The peso erased an earlier gain today, declining 0.1 percent to 1,814.75 per U.S. dollar and extending its drop this year to 2.6 percent.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

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

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