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EMERGING MARKETS-Mexico peso rallies on reform optimism, Fitch eyed
May 8, 2013 / 12:05 AM / 4 years ago

EMERGING MARKETS-Mexico peso rallies on reform optimism, Fitch eyed

* Deal to restart talks on economic reforms lifts peso
    * Talk of rating action further supports Mexican currency
    * Mexican peso up 0.74 pct, Brazil real gains 0.2 pct

    By Noe Torres
    MEXICO CITY, May 7 (Reuters) - Mexico's peso firmed sharply
on Tuesday after opposition parties said they would resume talks
on economic reforms with the government following a spat over
local elections.
    Opposition leaders said they had agreed with President
Enrique Pena Nieto's ruling Institutional Revolutionary Party
(PRI) on new measures to prevent vote buying in upcoming local
elections, allowing work on reforms to continue. 
    Pena Nieto was set to present on Wednesday a financial
proposal that was recently derailed by allegations his party was
using funds meant for a social program to buy votes. 
    Optimism that Pena Nieto will be able to push major economic
reforms through the country's divided Congress has helped the
peso gain 7 percent this year. 
    "The market is pricing in that they are looking for ways to
push the reforms through in the next congressional session,"
said Mario Copca, an analyst at CI Banco in Mexico City. 
    Mexican lawmakers went on break this month and both houses
are set to resume in September.
    The Mexican currency gained 0.74 percent to 12.0203
per dollar, leaving the currency near the 20-month high it hit
last month.
    Talk that Fitch Ratings could soon raise its outlook on
Mexico's BBB credit rating to positive from stable also
supported the peso.
    A positive outlook would signal that the rating agency is
considering upgrading Mexico's credit rating in the next 18
months or so. 
    A spokeswoman for Fitch said the company does not comment on
market rumors. 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 0.23 percent 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 2300 GMT:
 Currencies                         daily %    YTD %
                                     change   change
 Brazil real                2.0068     0.23     1.65
 Mexico peso               12.0203     0.74     7.02
 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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