Concerns that a strong showing by Democrats on Tuesday would hinder US President Donald Trump's agenda have played into a weaker dollar.

"The key risk for EM here is that Trump could become a lame duck when it comes to domestic matters, given we are seeing a divided Congress and focus on more geopolitics like the Middle East ..." said Jakob Christensen, chief analyst and head of EM research at Danske Bank.

MSCI's index of currencies in Latin America added 0.1 percent, while the MSCI index of stocks in the region rose 1.3 percent, led by gains in Brazil and Mexico.

Brazil's real weakened against the greenback, but the Bovespa stock index traded 0.9 percent higher and was near an all-time peak seen earlier in the session.

The index has gained about 17 percent this year amid broad bullishness spurred by hopes of reforms by market-friendly President-elect Jair Bolsonaro.

Energy firm Cosan SA Industria e Comércio led the index's gains on the day, rising about 9.3 percent.

Cosan said it will not take over Cosan Logística, canceling the proposed deal amid shareholder concerns.

Mexico's peso firmed 0.4 percent while stocks were up 1.1 percent.

The decision by incoming Mexican President Andres Manuel Lopez Obrador (AMLO) to scrap a new airport for Mexico City has raised doubts among investors about his market friendliness.

"The Mexican peso's performance is purely a result of the news relating to the airport. I think the market is giving AMLO the benefit of the doubt," said Christian Lawrence, a senior market strategist with Rabobank.

Chile's peso, the top gainer among Latin American currencies, traded near two-week highs after data showed economic activity rose in September.

Argentinean benchmark equities rose 0.4 percent and were set to record a fresh one-month closing high while the peso weakened about 0.3 percent.