Colombia Yields Decline to Record Low Before CPI; Currency Rises

Colombian peso bond yields fell to a record low on speculation that inflation was contained in November, boosting demand for the fixed-rate securities.

The yield on the government’s 10 percent bonds due in July 2024 fell two basis points, or 0.02 percentage point, to 5.96 percent at the close of trading in Bogota, according to the central bank. The peso strengthened 0.1 percent to 1,812.99 per U.S. dollar, extending its rally this year to 6.9 percent.

“The expectations are for inflation and the central bank to hold steady, and that justifies demand in the long end of the curve,” said Juan Camilo Santana, an analyst at Cia. de Profesionales de Bolsa brokerage.

The central bank board has probably ended its current cycle of interest-rate cuts following last month’s surprise quarter-point reduction, President Juan Manuel Santos said yesterday in an interview.

“It gives me an additional reason to think that the central bank will hold rates,” said Cesar Corredor, an analyst at Banco de Bogota SA.

Colombia’s monthly inflation was 0.16 percent in November, matching the rate in October, according to the median forecast of 28 economists surveyed by Bloomberg. The national statistics agency is scheduled to release the report tomorrow.

Three-month swap rates were unchanged at 4.38 percent, according to data compiled by Bloomberg.

The central bank will hold borrowing costs at 4.5 percent at its December meeting, according to all of the 15 economists in a Bloomberg survey. The final policy meeting of the year was postponed to Dec. 21 from Dec. 14, the central bank said today, citing an agenda conflict for Finance Minister Mauricio Cardenas.

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