* Brazil's real gains 0.66 pct, Mexican peso adds 0.3 pct
* Tuesday's Fed statement fuels rally across region
* Record high international reserves in Mexico favor peso (Adds comments, updates prices)
By Samantha Pearson and Caroline Stauffer
SAO PAULO/MEXICO CITY, Oct 13 (Reuters) - The Brazilian real firmed to a two-year high on Wednesday as traders bet more monetary easing in the United States would increase flows into the country's debt market.
Mexico's currency also extended a recent rally to reach its strongest levels in nearly five months, but Chile's peso weakened as traders took profits on the currency after it hit a 29-month high in the previous session.
Minutes from the Federal Reserve's September meeting, released on Tuesday when Brazil's markets were closed for a holiday, indicated that policymakers were considering buying more longer-term U.S. government debt to drive borrowing costs lower. [ID:nN12188145]
Such measures, known as quantitative easing, could keep yields on U.S. Treasuries close to record lows, encouraging investors to pour more money into higher-yielding debt across the whole of Latin America.
Brazil is one of the most attractive destinations, given its high interest rates.
The Brazilian real
"[The Fed statement] was conducive to the same trade we've been seeing: sell the dollar and buy emerging markets," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.
"But it's not just about the Fed asset purchases," he said. Low interest rates across much of the developed world will continue to encourage investors to pour money into the region, he added.
MEXICAN PESO GAINS; CHILE SELLS OFF
The Mexican currency
"The most important factor supporting the peso continues to be liquidity from abroad after the Fed practically confirmed that it is preparing for quantitative easing yesterday," said Luis Flores, an economist at brokerage IXE in Mexico City.
After strong advances in the previous session, the Chilean
peso
The Chilean peso has soared over recent months, partly due to a rally in the price of copper, the country's main export. The Andean country is also experiencing high growth rates, as its economy rebounds much more quickly than expected from the effects of a devastating earthquake in February. (Additional reporting by Maria Jose Latorre and Froilan Romero in Santiago and Lorena Segura in Mexico City; Editing by Dan Grebler)