EMERGING MARKETS-Latam FX mixed; Mexico peso rallies on reform hopes

* Investors grow optimistic on Mexico economy, reforms
* Brazil real weakens for 2nd day after Monday intervention
* Mexico peso gains 0.5 pct, Brazil real drops 0.4 pct

By Walter Brandimarte
RIO DE JANEIRO, March 12 (Reuters) - The Mexican peso hit a
fresh 18-month high on Tuesday as investors grew optimistic that
structural reforms are gaining traction in the country, further
boosting its economic prospects.
Other Latin American currencies posted more modest gains,
supported by rising metal prices, but the Brazilian real slipped
for a second day following a Monday intervention by the central
bank that halted its appreciation trend.
Mexico's gained 0.5 percent to 12.4770 per dollar, back to
levels not seen since September 2011, after President Enrique
Pena Nieto unveiled last night a bill to shake up the country's
telecom sector, raising bets that other reforms will follow.

"Mexico's structural reforms continue to build momentum.
This time it was the Initiative for the Telecom reform signed by
Pena Nieto," Citi analysts wrote in a note to clients. "We keep
thinking that the Mexican peso will keep on outperforming the FX
market."
The peso has strengthened over 2 percent since Friday, when
policymakers announced a one-off cut in the country's base
interest rate, which fell to an all-time low of 4.0 percent from
4.5 percent. Rather than reducing the appeal of domestic assets,
the decision was seen by investors as further boosting Mexico's
economic prospects.
In Brazil, on the other hand, the real weakened
0.4 percent to 1.9632 per dollar, one day after the central bank
intervened to keep the currency weaker than 1.95 per dollar - a
mark many analysts consider as a boundary of an informal trading
band imposed by policymakers.
"In a certain way the central bank indicated it is working
with a 1.95 real floor to the currency. We are likely to see the
exchange rate hovering between 1.95 and 2.0 units per dollar,"
said Luciano Rostagno, chief strategist with WestLB bank in
Brazil.
The real had pierced the 1.95-per-dollar level for the first
time in 10 months on Friday, after higher-than-expected
inflation data increased bets that the central bank would soon
raise interest rates, adding to the appeal of real-denominated
assets.
The Brazilian real has gained nearly 4 percent so far this
year on bets the central bank would use the currency as a tool
to cheapen the cost of imported goods and help anchor inflation
expectations.
Brazil's consumer inflation reached 6.31 percent in the
12-month period through February, nearing the ceiling of a
government target of 6.5 percent.
In Chile, the peso climbed 0.15 percent to 470.80
per dollar, supported by gains in the price of copper, the
country's main export product.

Latin American FX prices at 1820 GMT:

Currencies Daily YTD pct
pct change
Latest change
Brazil real 1.9632 -0.39 3.91

Mexico peso 12.4770 0.46 3.10

Chile peso 470.8000 0.15 1.68

Colombia peso 1800.0700 0.13 -1.89

Peru sol 2.5940 0.04 -1.66

Argentina peso 5.0750 0.00 -3.20

Argentina peso 7.8200 0.00 -13.30