The Mexican peso firmed 0.50 percent on Tuesday as investors started unwinding dollar positions following a Fitch downgrade of the country's debt for the first time in more than a decade.

On Monday, Fitch cut Mexico's sovereign rating to BBB from BBB-plus. The expected move had kept markets on tenterhooks for several weeks, prompting many to buy dollars as a precaution.

The peso traded at 12.9025 per dollar.