Latin America's currencies will tread carefully into the new year in the face of continuing political tensions in the region and worries over more protectionist talk in the US presidential election campaign later in 2020, a Reuters poll showed.

Mexico's peso and Brazil's real, the top Latin American currencies, were forecast to stay within recent ranges or close to present levels. The survey was compiled Jan. 6-9, amid the onset of the latest US-Iran escalation.

The near term looks positive due to a prudent attitude from the Mexican central bank and some signs of improvement in Brazil's economy, said Juan Prada, a Barclays strategist. However, the second half of 2020 could prove more challenging.

"US elections and potential threats on trade and migration, and institutional deterioration in Mexico leading to AMLO's third year can bring downside risks later in 2020," he added, referring to President Andrés Manuel López Obrador.

US President Donald Trump could resort to bashing Mexico on issues of trade and migration to stoke his base and improve his re-election chances, similar to his successful 2016 bid to reach the White House, analysts say.

The peso finished 2019 with a 3.6% gain, which mainly came late in the year after changes to the US-Mexico-Canada Agreement (USMCA) were agreed to following months of wrangling over the trade pact to ensure tougher labor rules in Mexico.

The currency will trade at 19.50 per dollar in 12 months, weakening 3.9% from where it was quoted on Thursday, but staying inside a well-established trading band for a fourth year, according to the median estimate of 22 strategists.

Banxico - as the Bank of Mexico is known - has been cutting its benchmark interest rate gradually to help restart anemic growth, raising doubts among investors over the peso's future carry trade value.

Last month, officials highlighted their concern that a recent minimum wage hike could stoke price pressures, meaning they could refrain from more aggressive easing in coming months.

A harsh political climate that engulfed Latin America at the end of 2019, with an unusual rift between Brazil and Argentina and an outburst of protests in Andean countries, will also weigh on the region's foreign exchange markets.

"Brazil's economy may be affected by the new policy orientation in Argentina, which is expected to become more protectionist, leading to a further reduction in trade," Peruvian economic advisory firm Phase Consultores analysts wrote in a report this week.

The election of leftist Alberto Fernández in Argentina, who Brazil's right-wing President Jair Bolsonaro has called a "red bandit," has set the stage for a run-in between South America's two biggest economies. Fears about Argentina's debt problems and new government were a factor behind the real's 3.5% loss against the dollar last year. Another reason was the appearance of unexpected hurdles in the approval of a landmark pension overhaul.

Barclays's Prada cited "the lack of clear reform agenda and remaining fiscal pressures" as possible risks for the Brazilian currency in the second half, as officials push for major changes in the country's tax system and some privatizations.

The real was pegged at 4.0 per dollar in a year, implying a 1.7% appreciation from Thursday. Nevertheless, the currency was seen weakening in one and three months, a rare prediction for the short term that reflected analyst wariness.

Chile's peso was expected to trade at 760 per dollar in 12 months, virtually unable to recover from the hit it took in 2019 after an outbreak of social discontent against the country's long-standing economic model.

In Argentina, FX strategists foresaw pressures on the peso's heavily regulated interbank exchange rate starting to mount beginning in June, when a 180-day freeze on public service tariffs negotiated by the Peronist government with business leaders expires.