Mexico's peso stabilized on Tuesday after a four-day slide as investors eyed a debate over a hotly contested central bank bill, while other Latin American currencies gained footing on optimism around COVID-19 vaccines and higher oil prices.

The Mexican peso gained 0.2pc to trade at 20.1978 per dollar.

The lower house of Mexico's Congress on Tuesday will debate the bill that critics say would force Mexico's central bank to accept money from drug gangs, lawmakers said, and the measure could go to a vote on the same day.

Ratings agency Moody's warned late on Monday that the reform would be "credit negative" for the sovereign because it would compromise the bank's autonomy.

"If they push it through the House today, USDMXN could make a quick move up to 20.50 as markets fret for a few days over the implications," FX strategists at BMO Capital Markets said in a note. "We don't think USDMXN will stay above 20.00 for long, so we would be sellers on a spike."

The oil exporter's currency hit a March high versus the dollar last week, aided by stronger crude prices, hopes of better trade ties under U.S. President-elect Joe Biden and mostly on hopes of a steady global recovery next year.

The Brazilian real and the Colombian and the Chilean pesos firmed against the dollar, weakened by hopes of more U.S. coronavirus relief aid.

Minutes of Brazil's latest central bank meeting showed policymakers see inflation staying high in December due to temporary shocks.

Central bank President Roberto Campos Neto said the country's economic recovery, which he described as V-shaped, has started to lose steam.

The real had rallied last week after policymakers said they could "soon" drop a pledge to keep rates lower for longer amid a spike in inflation.

The currency of the world's largest copper producer, Chile, gained 0.1pc as copper prices firmed, supported by strong factory data from China, the world's top metal consumer.