UPDATE 1-IMF very likely to renew Mexico flexible credit line-Carstens

MEXICO CITY, Oct 31 (Reuters) - The International Monetary fund should soon renew a flexible credit line for Mexico worth $72 billion to guard against financial turmoil, Mexican central bank governor Agustin Carstens said on Wednesday.

The IMF will very likely renew the credit line before the incoming administration takes over at the start of December, Carstens said at an event in Mexico City.

``We are very advanced in the talks,'' he said. ``The reality is that it will be renewed under the same terms as the current line, including the amounts.''

Mexico did not have the $72 billion 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.

A recent slump in the peso currency has not disrupted market liquidity, Carstens said. The peso broke past the psychological 13-per-dollar level this week to a seven-week low.

The peso, one of the world's most liquid emerging market currencies, has tumbled repeatedly past 14 per dollar during the last five years.

Carstens earlier said Mexico's annual inflation rate should slow below its 4 percent tolerance threshold in future. He had warned on Tuesday the central bank was close to tightening borrowing costs if inflation does not cool in coming months.

The central bank held its benchmark interest rate steady last week at 4.50 percent and policymakers warned that a renewed slump in the peso could further pressure inflation.