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EMERGING MARKETS-Brazil's real hits all-time low amid emerging FX selloff

By Susan Mathew

(Updates prices) By Susan Mathew Feb 7 (Reuters) - Brazil's real hit an all-time low on Friday amid a selloff in emerging market currencies and stocks, sparked by a strong dollar and concerns about the coronavirus outbreak taking a toll on global growth. The real fell 0.9% to 4.3204 per dollar and was on course for its sixth weekly drop, with traders testing the central bank's resolve not to intervene in the market to arrest its decline. The central bank on Wednesday issued a surprisingly clear forward guidance that the easing cycle was over after it cut interest rates to a record low as widely expected. "The historically low key rate remains a burdening factor for the BRL, especially since the real interest rate is now close to zero," wrote You-Na Park-Heger, an analyst at Commerzbank. "We therefore see no scope for a recovery in the BRL for the time being," she said, adding that a moderate pick-up in the currency can be expected in the second half of the year as the government's reform efforts take effect and as the economy gradually recovers. Brazilian data showed that consumer prices rose by 0.21% in January, its smallest rise since 1994, driven by a sharp decline in meat prices. Meanwhile, the MSCI index of emerging market currencies slumped 0.7% to record its worst day since August as the dollar gained favor from strong U.S. economic data and a dovish turn from many developing world central banks hurt currencies. Investors have also been grappling with the potential impact from the virus outbreak in China, where the death toll climbed to 636 and the number of infected cases rose above 30,000, hitting commodity prices, prompting companies to suspend operations and tempering growth expectations for China. Falling oil prices knocked 0.1% off the Colombian peso and put it on course for its third consecutive day of losses, while Mexico's peso fell 0.7%. The Chilean peso gave up 0.9% as prices of copper, its main export, slipped. The risk-off mood drove an index of Latin American equities down 1.8%. Brazil stocks fell 1% as iron ore miner Vale weighed, while reinsurer IRB Brasil Resseguros SA dropped 6.6%, leading declines on the index. Latin American stock indexes and currencies at 2010 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1089.24 -1.19 MSCI LatAm 2751.41 -1.84 Brazil Bovespa 113936.23 -1.09 Mexico IPC 44263.26 -0.52 Chile IPSA 4686.83 -0.27 Argentina MerVal 41169.38 0.644 Colombia COLCAP 1651.53 -0.15 Currencies Latest Daily % change Brazil real 4.3204 -0.91 Mexico peso 18.7933 -0.74 Chile peso 790.7 -0.87 Colombia peso 3414 -1.06 Peru sol 3.388 -0.39 Argentina peso (interbank) 60.7775 -0.15 (Reporting by Susan Mathew and Sruthi Shankar in Bengaluru; editing by Grant McCool)