Latin American currencies rose on Thursday as dovish signals from the Federal Reserve weakened the dollar and US treasury yields, inviting more buying into risk-driven assets.

Brazil's real rose 1%, even as coronavirus infections and deaths soared in the country. The country is set to overtake the United States as the worst stricken by the pandemic, with a sluggish vaccine rollout adding to investor concerns.

That, along with stretched fiscal spending and political woes, made the real one of the worst performing emerging market currencies in 2020 and again in 2021.

"Coupled with the risk that the lockdown measures might have to be extended for longer, which would hamper the recovery in Q2/21, the ongoing uncertainty over the 2021 budget and the fiscal outlook will be yet another headwind for the recovery in investor sentiment in the coming weeks," analysts at TS Lombard wrote in a note.

Broader emerging market stocks and currencies rose on weakness in the dollar and US treasury yields, after the minutes from the Fed's latest meeting showed that the bank was in no hurry to tighten monetary policy.

Pressure from high yields has weighed down emerging market assets this year, especially in the currency and fixed income space as yield differences narrowed between risky and more stable debt.

Chile's peso and the Peruvian sol both gained on strength in copper prices amid concerns over supply, while optimism over rising demand in major economies also supported prices.

Mexico's peso and Colombia's peso rose on recent gains in oil prices, as expectations of increased demand supported the crude market.

Mexican inflation rose above the central bank target in March, coming in in line with expectations. The Mexican central bank held its benchmark rate last month, supporting the peso, and had forecast slightly higher inflation in the coming months.

Latam stocks were flat in early trade.

Brazilian oil refiner Petroleo Brasileiro SA was one of the worst performers on the benchmark index after comments from President Jair Bolsonaro that recent hikes in natural gas prices were "unacceptable" and that it was still possible to change its pricing policy.

Concerns over Bolsonaro's interference in the company spurred a large selloff in Brazilian assets earlier this year on fears of more government interference in the private sector.