The wing-back has signed terms to 2026.
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Vazquez is the son of Braulio Vazquez, the Osasuna sporting director, and has emerged as a crucial part of coach Ruben Baraja's plans in the absence of injured captain Jose Gaya.
Vazquez had a year to run on his previous deal, with Valencia acting quickly to extended his stay.
The youngster is a former Spain U18 international.