Latin America's currencies are likely to enter the final stretch of a rocky year at a slow trot, saddled with worries over the economy and domestic politics that are starting to blur the view into 2020, a Reuters poll showed.
Forecasts for the Brazilian real and the Mexican peso at the close of the fourth quarter were markedly weaker than just a few months ago, when optimism about the US-China trade war and the future of the region's reforms prevailed.
The real will trade at 4.02 per dollar by the end of the year, according to the median estimate of 25 currency strategists polled September 30-October 2. That was 1.7% stronger than its value on Thursday but 6.6% softer than the forecast in July.
The 12-month outlook was weaker, too. Risks to the downside stem from "concerns on global growth or any difficulties to progress on the reforms, not only the pension bill but also other economic initiatives," Mauricio Nakahodo of MUFG said.
Less than a third of Brazilians approve of President Jair Bolsonaro's job performance, and his push for an unpopular overhaul of the country's retirement and tax systems faces more hurdles in Congress.
This week, Bolsonaro urged senators to pass the pension reform after a key ally in the Senate warned a second-round vote of the bill may not occur if the government reneged on promises made to lawmakers in return for their support.
At the same time, officials are rushing the tax plan. However, a roadblock appeared last month, when another senator aligned with the government said Congress could delay it next year due to a lack of consensus on the proposal. At 3.93 per dollar, the real's predicted value in one year was 4.1% stronger than Thursday's value but 2.7% weaker than September's forecast, reflecting analysts' attempt to pin down an outlook that the central bank paints as "highly uncertain". The Mexican peso was forecast to weaken to 19.9 per dollar by the close of 2019 as Mexico's economy loses momentum and barriers to trade threaten to reappear before the US presidential campaign next year.