By Gabriel Burin
BUENOS AIRES (Reuters) -The rallying Mexican peso is set to slip in the coming months after a temporary freeze on U.S. tariff hikes against other countries expires next week, a Reuters poll showed.
This would end a run-up that brought the currency to its strongest in almost a year last quarter following a sharp drop due to trade concerns at the end of 2024.
So far, the recovery has been supported by what turned out to be relatively benign new rules for Mexican exports in U.S. President Donald Trump’s overhaul of trade, as well as by the dollar’s retreat.
The peso is forecast to fall by a moderate 5.5% over the next 12 months to 19.80 per dollar from 18.72 on Tuesday, according to the median estimate of 22 FX experts polled June 27-July 2.
That new one-year consensus view is the firmest since an estimate of 19.20 per dollar in October. Year-to-date, the Mexican peso is up 13.2%.
In the last week of a 90-day pause on steep tariffs for many countries that Trump announced in April, tensions remain high between the United States and China, the European Union and Japan as trade partners work on different proposals.
While global frictions could weigh on its volatile currency, Erick Martinez, Latam FX and rates strategist at Barclays said: “Mexico is not subject to reciprocal tariffs, taking pressure off the peso into the global July 9 deadline.”
Any weakness should be limited “thanks to the protection of the USMCA (agreement) by which Mexico has maintained preferential trade treatment in the U.S.,” said Alejandro Saldaña, chief economist at Ve por Mas.
Monetary policy also looks supportive as the Mexican central bank’s cautious easing cycle and the possibility of rate cuts in the United States mean the market anticipates high local interest rate spreads will persist.
However, the potential renegotiation of Mexico’s trade agreement with the U.S. and Canada is likely to stoke uncertainty.
In Brazil, the real will likely depreciate 4% to 5.69 per dollar from 5.46 on Monday in 12 months. The currency is shielded by the highest local interest rate in two decades.
In Argentina, the peso is seen dropping 17% in one year to 1,465 per dollar, a moderate variation for the crisis-stricken currency that would still leave it within government targets.
Year-to-date, the Brazilian real has gained 11.2% and the Argentine peso has shed 15.7%.
(Other stories from the July Reuters foreign exchange poll)
(Reporting and polling by Gabriel Burin in Buenos Aires; additional polling by Renusri K and Jaiganesh Mahesh; Editing by Ross Finley and Barbara Lewis)
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