Surprise Rate Hold Upends Colombia’s Markets Ahead of Vote

Colombia’s peso plunged to the lowest since March 24 and short-term rates tumbled on Monday following the central bank’s decision to hold borrowing costs — defying expectations of a rate increase — just weeks before a pivotal election.

The peso fell 2.4% to 3,721 per dollar as markets reopened after a long weekend following the decision to hold the key rate at 11.25% on Thursday. All but one of the economists in a Bloomberg survey forecast a rate hike. Two-year swap contracts are slumping 22 basis points, while longer-dated 10-year rates rally. Dollar bonds sold off across the curve.