EMERGING MARKETS-Mexico peso rallies on Fitch talk, Brazil real up

Tue May 7, 2013 3:01pm EDT

* Talk of Mexico rating action lifts peso to near 1-mth high
    * Small dollar inflows support Brazil real
    * Mexican peso up 0.6 pct, Brazil real gains 0.2 pct

    By Jean Arce
    MEXICO CITY/SAO PAULO, May 7 (Reuters) - Mexico's peso
rallied on Tuesday on talk that Fitch Ratings could signal an
upcoming upgrade of the country's credit rating, while small
dollar inflows supported the Brazilian real.
    A rally in key Wall Street indexes, which flirted with all
time highs, also supported Latin American currencies by
encouraging investors to take on risk in emerging markets.
    The Mexican currency gained 0.6 percent to a near
one-month high of 12.0345 per dollar as traders speculated that
Fitch was about to review the outlook on Mexico's BBB credit
rating to positive from stable.
    A positive outlook would sign that the rating agency is
considering upgrading Mexico's credit rating in the next 18
months or so. 
    A spokeswoman for Fitch was not immediately available to
comment. A little over two months ago, however, the firm said
Mexico's ratings will depend on progress the new administration
makes on reforms to boost competitiveness, productivity, growth
and fiscal flexibility. 
    A formal review of Mexico's ratings was expected for this
month, Fitch's analyst Shelly Shetty told Reuters in an
interview in June 2012. 
    In Brazil, the real  rose 0.2 percent in the
afternoon, after trading practically unchanged during most of
the morning, as traders cited small dollar inflows in an
otherwise quiet market.
    "As net flows have been fairly muted, any inflow or outflow
results in exchange rate variations that have been modest in
general," said Waldir Kiel, an economist with H.Commcor
brokerage in Sao Paulo.
    
    Latin American FX prices at 1850 GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                2.0070     0.22     1.64
                                             
 Mexico peso               12.0345     0.63     6.89
                                             
 Chile peso               470.3000    -0.21     1.79
                                             
 Colombia peso           1827.4000     0.09    -3.36
                                             
 Peru sol                   2.6140    -0.04    -2.41
                                             
 Argentina peso             5.2100    -0.05    -5.71

 Argentina peso            10.0400    -1.69   -32.47
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