Colombia Swap Rates Surge on Santos Growth Outlook: Bogota Mover

Colombia’s swap rates jumped a day after President Juan Manuel Santos projected faster economic growth than analysts forecast, spurring speculation the central bank will avoid cutting borrowing costs.

Three-month swap rates rose eight basis points, or 0.08 percentage point, to 3.09 percent at 3:16 p.m. in Bogota, according to data compiled by Bloomberg. The increase was the biggest since June 21. The peso gained 0.2 percent to 1,915.54 per dollar, the strongest close since Aug. 19, after advancing the same amount yesterday.

The economy will grow at least 4 percent in the second quarter from a year earlier, Santos said yesterday in an interview at his office in Bogota. Gross domestic product expanded at an annual rate of 3.4 percent, according to the median forecast of 30 analysts surveyed by Bloomberg before the Sept. 19 report from the national statistics agency.

Santos’s comments reduce the chance of a “negative surprise” in the GDP report this week that would cause policy makers to cut rates, Juan Pablo Espinosa, the head analyst at Bancolombia SA, the country’s biggest bank.

Finance Minister Mauricio Cardenas told Javeriana Radio today that public works, construction and coffee and oil production indicate the economy probably exceeded expectations.

Policy makers held the target lending rate at 3.25 percent for a fifth straight month on Aug. 30, citing in minutes evidence that demand will grow. The central bank lowered borrowing costs by 2 percentage points from July 2012 to March 2013 as industrial output contracted and inflation slowed to a six-decade low.

The peso rose yesterday as Santos said in the interview that Colombia’s central bank should stop its program of daily dollar purchases at the end of the month as the peso weakens toward a level the Andean nation “can live with.”

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