Mexico's peso fell on Friday after the government said it would replace central bank head Alejandro Diaz de Leon after his term ends this year, while Chile's peso led losses for the week on political concerns and falling copper prices.

The Mexican peso fell 0.4% after President Andres Manuel Lopez Obrador said he would not propose a new term for Governor Leon after his tenure ends on Dec. 31, and instead nominate an economist with "social dimension."

The move comes amid speculation that the central bank will begin hiking rates this year, as inflation in Mexico heats up.

"We have had precedents where finance ministers or those type of people come in and it brings the central bank and the (government) administration closer together, which brings the question of central bank independence, but we will have to wait and see", said Viktor Szabo, a portfolio manager at ABRDN.

Chile's peso rose 0.4% on Friday but was set for a weekly loss of about 2.7%, its worst in nearly two months, after the country's ruling party failed to secure a majority in the body that will draft the new constitution, with independent candidates getting more votes.

A drop in copper prices also hurt the currency of the world's largest producer of the red metal, while no. 2 producer Peru's sol was set to lose about 1.7% this week.

Chilean stocks lagged their peers this week with a more-than 10% loss.

Broader Latam currencies fell, with MSCI's regional index down 0.3%, and was set to lose about 0.8% this week.

Risk-driven assets, particularly in emerging markets, tumbled earlier in the week after the minutes of the Fed's last meeting showed more talk of stimulus tapering at the bank than previously thought.

While the deadline for the Fed to consider tapering is still a way off, investors fear a continued rise in US inflation could bring the date forward.

Colombia's peso, which fell 0.4% on Friday, was also set to lose more than 1% this week, after S&P Global Ratings downgraded the country to "junk," or sub-investment grade, status.

Brazil's real shed 0.7% and was set for its worst week in nearly two months.

Argentina's peso was flat. The country said it will tighten COVID-19 lockdown measures due to a severe second wave of the virus.

However, Argentine stocks recently hit record highs as tight capital controls on the peso saw equities become the favored means of retaining exposure to the country.