* Chilean peso leads gains for second session * Dollar weakens after yuan fix lifts risk currencies * Investors eye runoff elections in U.S. state of Georgia (Updates prices throughout) By Shreyashi Sanyal Jan 5 (Reuters) - Latin American currencies rose on Tuesday after the dollar weakened on China's decision to lift its official yuan exchange rate by its highest margin since it abandoned a dollar peg in 2005. China's central bank set the official yuan midpoint at 6.4760 per dollar, while the downward move in the greenback pushed riskier currencies higher, with investors also keeping an eye on the United States Senate runoff elections in Georgia. "Think markets will eventually move to price in more fiscal support and ... this would push additional USD downside momentum particularly against Asia FX," said Mazen Issa, senior FX strategist at TD Securities. Brazil's real rose 0.1% after dropping nearly 2% on Monday. The country posted a negative trade balance in December. The UK variant of the coronavirus was confirmed in Sao Paulo on Monday, while China's suspension of imports from a Brazilian pork plant, over coronavirus issues, also raised concerns over any disruptions to Brazil's agriculture exports. Brazil is among the worst hit by the coronavirus and is racing to ramp up inoculations, playing catch up to neighboring Chile and Argentina, where they are underway. Concerns over the pandemic and Brazil's fiscal health saw the real underperform most emerging market currencies in 2020. It has also marked a weak start to 2021. Chile's peso outperformed its peers for a second session, rising 1.2% after the country's economic activity grew in November for the first time since the start of the COVID-19 pandemic in the South American nation. Risk-linked assets, particularly those in Latin America, are expected to recover this year on the back of loose monetary policy, large stimulus measures and the eventual vaccination of the populace. "Although the pandemic is weighing on the global economy at the moment, vaccinations are picking up speed in many countries. Fiscal and monetary policy are highly supportive, and financial conditions are very loose. We therefore continue to expect strong global growth in 2021, despite recent virus headlines," Mark Haefele, chief investment officer at UBS Global Wealth Management wrote in a note. Currencies of oil exporters Mexico and Colombia rose in tandem with a rise in oil prices. The Mexican government raised $3 billion in a 50-year note offering that was more than three times oversubscribed. The move is part of a bid to increase government finances after a spike in spending due to the pandemic. Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1320.13 1.2 MSCI LatAm 2459.21 -0.03 Brazil Bovespa 119455.15 0.51 Mexico IPC 44704.27 0 Chile IPSA 4367.18 2.58 Argentina MerVal 51533.96 1.583 Colombia COLCAP 1412.67 -0.38 Currencies Latest Daily % change Brazil real 5.2640 -0.01 Mexico peso 19.8620 0.46 Chile peso 695.2 1.25 Colombia peso 3441.25 0.18 Peru sol 3.6277 0.01 Argentina peso (interbank) 84.7900 -0.11 Argentina peso (parallel) 156 5.77 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru; editing by Barbara Lewis and Grant McCool)
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