Peru’s sol-denominated bonds registered their biggest weekly gain since September as bets foreign investment will spur gains in the currency boosted demand for the securities.
The yield on the nation’s benchmark 7.84 percent bond due August 2020 declined four basis points, or 0.04 percentage point, to 4.26 percent this week, according to prices compiled by Bloomberg. The yield dropped one basis point today. The price rose 0.27 centimo this week to 123.24 centimos per sol.
Foreign investors are buying bonds to take advantage of recent weakness in the sol, said Alberto Jabiles, a bond trader at BBVA Banco Continental in Lima. The sol touched a three-month low this week after the central bank increased reserve requirements to slow credit demand. Mining, energy and infrastructure projects will fuel economic growth next year and spur gains in the currency, Jabiles said.
“There’s been a little spike in the currency which has made foreign investors think now is a good moment to buy” sol bonds, he said in a phone interview from Lima. “Buying bonds is one of the few ways to get into the currency.”
The sol fell 0.2 percent to 2.6080 per U.S. dollar in trading today, paring its weekly gain to 0.2 percent, according to Deutsche Bank AG’s local unit. The currency touched 2.62 on Nov. 13, its weakest level since Aug. 10.
The central bank bought $10 million in the spot market today and said on its website it paid 2.6080 soles per dollar.