Updates with late afternoon trading

By Ragini Mathur, Avinash P and Purvi Agarwal

June 17 (Reuters) - Most Latin American currencies and stocks declined on Wednesday as investors assessed policy cues from the U.S. Federal Reserve, signaling an interest rate hike this year, alongside details of an interim truce between the U.S. and Iran.

The U.S. central bank held interest rates steady but policymakers expect a hike in borrowing costs later this year, with markets adjusting to the change in communication under new Chair Kevin Warsh.

"Warsh may have reshaped the optics - dropping the dot and cutting the statement - but the substance of this FOMC is hawkish," said Seema Shah, chief global Strategist, Principal Asset Management.

"With half the 18 dots signaling a hike this year, alongside higher inflation forecasts, the Fed may be just a few strong inflation and jobs releases away from tightening."

The dollar index =USD jumped to an over two-month high following the decision, pressuring LatAm currencies. The MSCI index tracking these currencies .MILA00000CUS dipped 0.6%, while the stocks counterpart .MILA00000PUS lost 0.9%.

Meanwhile, U.S. President Donald Trump defended his agreement with Iran, saying it had averted a global economic catastrophe, while warning he could launch fresh attacks if Tehran failed to honor its commitments.

The comments added to uncertainty for investors and sent oil prices a touch higher on the day.

Mexico's peso MXN= was the biggest loser, down 1.2% and on track for its biggest one-day drop in over a week.

Brazil's real BRL= depreciated 0.6% ahead of the central bank's monetary policy decision, where it is expected to deliver a third straight 25-basis-point cut as policymakers contend with persistent inflation pressures while gradually lowering borrowing costs from near two-decade highs.

The government said it would end subsidies for diesel and gasoline if crude oil prices stabilized around $80 per barrel.

Local stocks .BVSP slipped 0.8%, with miner Vale's VALE3.SA 2.4% drag among the biggest.

Chile's peso CLP= was down 0.6%, set to snap a six-session streak of gains - its longest since late January. Equities .SPIPSA declined 0.8% a day after the central bank held its benchmark interest rate at 4.5% for a fourth consecutive meeting, as inflation slowed slightly within the bank's target range.

However, the central bank lowered its 2026 economic growth forecast on Wednesday to between 1.0% and 1.75% from between 1.5% and 2.5% projected in March.

Argentina's stocks .MERV climbed 0.8%, an outlier. On Tuesday, the World Bank Group said it had approved a guarantee-backed financing package to help mobilize up to $2 billion in commercial loans for Argentina, aiming to lower financing costs and strengthen public debt management.

Separately, an Inter-American Development Bank report showed China was the fastest-growing buyer of Latin American and Caribbean goods in the first quarter of 2026, though the U.S. remained the region's top market.

Latin American countries have been seeking to diversify export destinations as Trump has challenged established trade ties with the region and threatened higher tariffs.

Key Latin American stock indexes and currencies:

Latin American market prices from Reuters
Equities	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1774.75	-0.03
MSCI LatAm .MILA00000PUS	2977.79	-0.90
Brazil Bovespa .BVSP	168374.38	-0.75
Mexico IPC .MXX	68654.93	0.03
Chile IPSA .SPIPSA	10813.72	-0.82
Argentina Merval .MERV	3313651	1.81
Colombia COLCAP .COLCAP	2376.37	0.07
Currencies	Latest	Daily % change
Brazil real BRL=	5.1172	-0.55
Mexico peso MXN=	17.383	-1.16
Chile peso CLP=	890.9	-0.57
Colombia peso COP=	3456.5	-0.97
Peru sol PEN=	3.3767	0.82
Argentina peso (interbank) ARS=RASL	1441	-0.35
Argentina peso (parallel) ARSB=	1455	-0.34