In an address on Tuesday, Yellen said it would be "imprudent" to keep rates on hold until inflation accelerates to the US central bank's 2 percent target.

Her remarks added fuel to growing bets on a December rate hike, apparently contradicting those who believed concerns over the slow pace of inflation would lead the Fed to wait longer to hike rates.

US President Donald Trump's plan to slash rates on businesses and the wealthy could also speed up consumer price increases, paving the way for tighter monetary policy.

Higher US rates often drain capital away from higher-yielding, but riskier emerging markets, weighing on their currencies.

"The tax plan could boost the American economy, bolstering the US dollar," said Pablo Spyer, director at brokerage Mirae in Sao Paulo.

The Brazilian real weakened as much as 1 percent, breaching the threshold of 3.20 per dollar for the first time in a month before paring losses.

Currencies in Chile, Mexico and Colombia all slipped between 0.4 percent and 0.8 percent.

Brazil's benchmark Bovespa stock index lost ground for a fifth straight session as investors booked profits from a recent rally that drove it to an all-time high earlier this month.