Peru’s sol slumped to its weakest level in more than a year as slowing economic growth and speculation that the Federal Reserve will reduce monetary stimulus sparked a selloff in the Andean nation’s bonds.
The sol depreciated 0.8 percent to 2.7220 per U.S. dollar at 11:53 a.m. in Lima, the lowest level on a closing basis since October 2011, according to prices from Datatec. The drop extended this month’s decline to 2.8 percent.
Sol-denominated bonds tumbled on speculation that U.S. economic growth will lead the Fed to slow the pace of bond purchases that have buoyed emerging-market assets.
“Yields keep rising, and the sol keeps falling,” said Walther Benavides, a trader at BBVA Banco Continental in Lima.
“Foreigners with positions in local currency bonds are terrified because they’re losing on both fronts.”
The yield on the benchmark sol bond due in August 2020 rose 20 basis points, or 0.20 percentage point, to 4.43 percent, the highest since Sept. 7, according to data compiled by Bloomberg. The yield declined to a record low 3.67 percent on April 19.
Peru’s economy expanded 4.8 percent in the first quarter from a year earlier, the slowest pace in more than three years, as investment growth eased and exports fell.
bloomberg.com
The sol depreciated 0.8 percent to 2.7220 per U.S. dollar at 11:53 a.m. in Lima, the lowest level on a closing basis since October 2011, according to prices from Datatec. The drop extended this month’s decline to 2.8 percent.
Sol-denominated bonds tumbled on speculation that U.S. economic growth will lead the Fed to slow the pace of bond purchases that have buoyed emerging-market assets.
“Yields keep rising, and the sol keeps falling,” said Walther Benavides, a trader at BBVA Banco Continental in Lima.
“Foreigners with positions in local currency bonds are terrified because they’re losing on both fronts.”
The yield on the benchmark sol bond due in August 2020 rose 20 basis points, or 0.20 percentage point, to 4.43 percent, the highest since Sept. 7, according to data compiled by Bloomberg. The yield declined to a record low 3.67 percent on April 19.
Peru’s economy expanded 4.8 percent in the first quarter from a year earlier, the slowest pace in more than three years, as investment growth eased and exports fell.
bloomberg.com
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