UPDATE 1-Fitch revises Uruguay rating outlook to positive

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NEW YORK, July 13 (Reuters) - Fitch Ratings on Monday revised its outlook on Uruguay's credit ratings to "positive" from "stable," saying the country has shown great resilience to the impact of the global financial crisis.

Fitch rates Uruguay's foreign-currency bonds at BB-minus, or three notches below investment grade. Standard & Poor's and Moody's also rate the country at an equivalent level, but both have a "stable" outlook on their ratings.

Fitch said in a statement that Uruguay's resilience to external shocks has increased as a result of greater exchange rate flexibility, rising international reserves, lower external financing needs and prudent measures that have strengthened the banking system.

"The ability of the authorities to allow the exchange rate to act as a buffer to absorb the fallout from the global financial crisis without negative effects on inflation or the highly dollarized financial system represents a notable shift in the policy framework," Fitch's analyst Erich Arispe said in the statement.

He added that such a policy will "improve the capacity of the country to face future external shocks."

Fitch also praised the government for raising interest rates, in spite of economic deceleration, to stem inflationary pressures arising from domestic supply shocks in the first quarter of 2009.

Going forward, a further increase in Uruguay's international reserves and a recovery of its growth trajectory would be positive for Uruguay's ratings, Fitch said. Fiscal policy will also need to be adjusted to bring the country's debt dynamics back to a declining path, it added. (Reporting by Walter Brandimarte; Editing by Jan Paschal)