* Brazil posts lowest monthly February inflation since 1994 * Coronavirus buoys safe-have demand for U.S. dollar * Chilean peso hits two-month low as copper prices weaken * Argentine bonds fall after IMF nod for restructuring By Shreyashi Sanyal Feb 20 (Reuters) - Latin American currencies took a beating on Thursday, as investors fretted over the global spread of the coronavirus after cases outside of China rose, with Brazil's real hitting a new low amid rising safe-haven buying of the U.S. dollar. The number of new infections rose in South Korea, while Japan reported two new deaths and new research suggested the pathogen was more contagious than previously thought, adding to the alarm. "There is still uncertainty about how long this (outbreak) is going to last and how big the economic effect is going to be, not just on China, but on supply chains around the world," said Scott Brown, chief economist at Raymond James. The dollar was perched at a 10-month high against the Japanese yen after rising nearly 2% since Tuesday, while also upping pressure on Latin American currencies. Brazil's real weakened 0.4% to 4.3917 against the greenback, touching a fresh record low. Data showed Brazilian inflation slowed in February to its lowest in over a quarter of a century. "The headline rate is likely to edge down further over the course of the year, allowing the central bank to keep the Selic (key interest) rate at its historic low," William Jackson, chief emerging markets economist at Capital Economics, wrote in a note. The central bank of Latin America's biggest economy said it would lower banks' reserve requirements on time deposits to 25% from 31%, starting on March 16, in a move that will free up an estimated 49 billion reais ($11.2 billion) of liquidity. A basket of currencies in the region weakened by 0.4%, while MSCI's index for Latin American equities fell 0.5%. The Chilean peso fell nearly 1% against the dollar, touching levels not seen since early December as prices of copper, the country's biggest export, slipped on rising worries of demand. Argentine bond prices fell 1.5% after the International Monetary Fund essentially gave the government a green light to restructure its bonds. "The IMF's assessment shouldn't come as a surprise," analysts at Credit Suisse wrote in a note. "Argentina also needs to extend its upcoming amortizations with the IMF as much as possible in order to alleviate the enormous pressure on international reserves from executing such payments." Other major currencies in Latin America, including Mexico and Colombia, also eased. Key Latin American stock indexes and currencies at 1446 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1097.27 -0.58 MSCI LatAm 2762.31 -0.51 Brazil Bovespa 115998.43 -0.45 Mexico IPC 0.00 0 Chile IPSA 4524.50 0.12 Argentina MerVal 38489.94 0.258 Colombia COLCAP 1680.69 0.26 Currencies Latest Daily % change Brazil real 4.3815 -0.38 Mexico peso 18.7376 -0.96 Chile peso 803.7 -0.61 Colombia peso 3400 -0.51 Peru sol 3.3888 -0.23 Argentina peso (interbank) 61.7850 -0.09 (Reporting by Shreyashi Sanyal and Medha Singh in Bengaluru; editing by Nick Macfie)
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