Chile and Colombia: Latin America Bond and Currency Preview

By Jamie McGee and Andrea Jaramillo

July 7 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from a previous session.

Chile: Economic activity expanded at a 2.1 percent annual rate in May, compared with a 4.8 percent pace the prior month, according to the median forecast of 11 economists surveyed by Bloomberg News.

The trade surplus widened to $1.5 billion in June, compared with $993 million a month earlier, according to the median forecast of 9 economists surveyed.

The central bank is scheduled to release the growth and trade data at 8:30 a.m. New York time.

The peso weakened 0.5 percent to 511.92 per dollar on July 4, from 509.23 yesterday.

The yield for a basket of five-year peso bonds in inflation-linked currency units fell 8 basis points to 2.76 percent, according to Bloomberg composite prices.

Colombia: The central bank's board discussed the need to ``bolster'' its reputation for fighting inflation at its June meeting as food and oil prices pushed consumer price increases above its annual target, according to minutes released July 4.

Policy makers announced at the June 20 meeting that the central bank would buy $20 million a day in the currency market through competitive auctions to accumulate foreign reserves. Banco de la Republica also left its key rate unchanged at a six- year high of 9.75 percent.

Because of the July 4 U.S. Independence Day holiday, Colombia's currency and government debt market operated in the so-called next-day market, in which payment and delivery are made the following trading day. The peso rose 2.2 percent on July 3 to 1,746.9 per dollar.

The yield on Colombia's benchmark 11 percent bonds due in July 2020 was little changed at 12.68 percent, according to Colombia's stock exchange.

To contact the reporters on this story: Jamie McGee in New York at jmcgee8@bloomberg.net; Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net.