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Mexican peso expected to fall after US tariff pause - poll

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Poland delivers surprise interest rate cut

(Updates with afternoon trading levels)

By Ragini Mathur and Purvi Agarwal

July 2 (Reuters) -

Latin American currencies inched higher in volatile trading

on Wednesday, as investors monitored U.S. trade negotiations

ahead of President Donald Trump's July tariff deadline.

Investors remained on edge as Trump said he was not

considering extending the deadline for countries to negotiate

trade deals with the United States. The status of talks with

Japan remained unclear, while a deal was expected with India and

struck with Vietnam.

The dollar index edged 0.2% higher after nine

sessions of declines, its longest losing streak since 2008,

though concerns remained over the potential impact of Trump's

massive tax-cut and spending bill, estimated to add $3.4

trillion to the country's debt pile.

Most currencies in Latin America swung higher after initial

losses, though Mexico's currency lagged with a 0.3%

decline.

A Reuters poll showed that the rallying Mexican peso is set

to slip after Trump's tariff pause expires next week.

Copper producer Chile's peso climbed 0.2%, while

Peru's sol inched 0.4% up, as prices of the red metal

rose.

Brazil's real also reversed its initial declines

and was last up 0.7% to 5.42 per dollar.

Investors have viewed Latin American assets as a safe haven

from Trump's tariffs, except for Mexico, as exports from Latin

American countries, excluding Mexico, to the United States are

relatively smaller compared with those from Asian economies.

MSCI's index for Latin American currencies

was last up 0.2%, having gained nearly 18% in the first six

months of 2025, its most since 2009, also benefiting from a

shift out of U.S. assets.

"We see good reasons for many EM currencies to maintain

their strong performance (in the second half) ... a lot has

resulted from the dollar simply being outplayed, but a strong

counterattack by the USD is not in our playbook," said HSBC

Global Research analysts in a note.

Analysts added that investors were more focused on upcoming

elections in the region, and that until those elections pointed

to "market-friendly outcomes", the short-term concerns may be

overlooked.

The region's stocks gauge also reversed its

initial course to advance 0.4% on Wednesday.

Heavyweight Brazilian shares fell 0.3%, as

losses in financials and utilities weighed on the index.

Elsewhere in emerging markets, Poland's central bank

delivered a surprise 25 basis-point cut to its main interest

rate, while also lowering its inflation expectations for the

upcoming years.

The Polish zloty shed 0.4% against the euro.

Highlights:

** Mercosur countries agree to expand exemptions to foreign

tariffs

** Emerging market debt sale surge defies global turmoil

amid signs of de-dollarisation

** Brazil's central bank needs time to assess data after

signaling pause in rate hikes, official says

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1231.21 0.16

MSCI LatAm 2366.68 0.42

Brazil Bovespa 139119.53 -0.31

Mexico IPC 58254.15 0.76

Argentina Merval 2056580.2 1.255

2

Chile IPSA 8266.98 0.24

Colombia COLCAP 1690.32 0.93

Brazil real 5.4221 0.66

Mexico peso 18.7795 -0.3

Chile peso 926.33 0.18

Colombia peso 3995.4 0.7

Peru sol 3.5475 0.35

Argentina peso 1228.5 -0.53

(interbank)

Argentina peso (parallel) 1220 0.41