Most Latin American currencies gained on Tuesday, with Brazil's real rallying 1% against a steady dollar, while the Mexican peso firmed after surging inflation raised bets for another interest rate hike later this week.
The Mexican peso edged up 0.3% after consumer prices rose 6.24% in the year through October, more than double the central bank's target, that will likely lead to a fourth consecutive interest rate hike later this week.
Mexico's central bank, known locally as Banxico, will likely raise its benchmark interest rate by 25 basis points to 5% on Thursday, according to a Reuters poll. Some also forecasted a larger hike.
"Rate hike expectations for Banxico ahead of the Fed meeting last week had risen considerably with the swap market pricing in rate hikes of up to 100bp until year-end, which points towards rate steps of 50bp," wrote Elisabeth Andreae, an analyst at Commerzbank.
Brazil's real hit a three-week high. With fiscal spending already a worry, President Jair Bolsonaro is raising pressure on lawmakers regarding an amendment to expand government spending next year, allowing him to ramp up welfare programs during his likely re-election campaign.
Bolsonaro, whose popularity is sliding, is set to join the center-right Liberal Party.
Sao Paulo-listed stocks rose 1.54%, with a slew of corporate updates in spotlight. State-controlled lender Banco do Brasil SA rose 2.4% after its chief financial officer said the bank will seek to accelerate loan disbursements in riskier credit lines to increase profitability in the coming quarters.
Peer BTG Pactual SA rose 2.8% after its third-quarter net income that beat analysts' estimates. Airline Gol fell 0.6% after it reported a net loss of 884.6 million reais ($160.54 million) for the third quarter as traffic remained below pre-pandemic levels.
The dollar was stable against a basket of currencies . Investors now await key inflation data due on Wednesday, which may offer clues as to when the Federal Reserve will raise interest rates.
The currency of the world's top copper exporter Chile rose 0.7% to a more-than-one-month high of 795.73 against the dollar as copper prices ticked higher. But Chile cut its forecast for mining investments through 2030 by 6.9% as two projects were removed.
Meanwhile, an impeachment process against Chile's center-right President Sebastián Piñera over allegations of irregularities in the sale of a mining firm, will advance to the Senate after being approved by a majority of deputies in the lower chamber. This comes just weeks before presidential elections.