April 4, 2014 / 7:40 PM / in 4 years

UPDATE 1-Mexico hopes to hold onto $72 bln IMF credit line -finance minister

(Adds background on 2008 crisis, credit line)

ACAPULCO, April 4 (Reuters) - Mexico hopes to hold onto a flexible credit line with the International Monetary Fund worth around $72 billion in order to help protect the country’s financial markets, Finance Minister Luis Videgaray said on Friday.

Videgaray said holding onto the credit line would be helpful “to assure the stability of Mexican financial markets” with investors expecting less U.S. monetary stimulus and an eventual move to raise benchmark interest rates in the United States.

“Our goal is to maintain the flexible credit line in the same terms,” he told reporters at a banking convention in the Pacific resort of Acapulco. He said negotiations with the IMF were set for the second half of the year.

Foreign holdings of Mexican peso debt have grown sevenfold since 2008 to around 1.9 trillion Mexican pesos ($146.03 billion) and tighter monetary policy in the United States could push investors to dump Mexican assets, hammering the peso.

Mexico did not have the safety net during the 2008 financial crisis, when it suffered one of the biggest hits among emerging market economies because of its close ties to the United States.

The IMF granted the credit line in April 2009, though Mexico never had to make use of it. Only a handful of emerging markets, including Poland and Colombia, have similar credit lines.

$1 = 13.0108 Mexican Pesos Reporting by Tomas Sarmiento and Elinor Comlay; Editing by Grant McCool

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