Mexico's peso may dip against the dollar once the United States starts tightening monetary policy but the overall impact on Mexico should be limited, Finance Minister Ernesto Cordero said on Sunday.

The peso has risen to near its highest levels since October 2008, buoyed by flows of foreign portfolio investment into Mexico and improving prospects for its export-dependent economy.

The currency reached 11.5960 per dollar on Wednesday, the last trading day before Mexican financial markets closed for the Easter holidays.

Once the United States starts to have a more constrained monetary policy ... it is to be expected that many of the flows that are arriving in Mexico will no longer arrive ... but this is not something we think could seriously affect the Mexican economy, Cordero told reporters at a news conference. We've taken the steps needed to face such a situation.

Cordero pointed to Mexico's strong foreign reserves and access to a $72 billion flexible credit line with the International Monetary Fund as sufficient to cushion any sudden shift in global financial flows as evidence the government was prepared.

Mexico's central bank has sold $600 million in dollar put options every month since February 2010 as part of a program to amass foreign reserves.

The central bank holds more than $124 billion in reserves.

(Reporting by Tomas Sarmiento; Writing by Robert Campbell; Editing by Leslie Adler)

Mexico International Monetary Fund