* Argentine peso at record low, stocks slide 4.5% * Argentine FX controls to provide only temporary relief - CS * Don't anticipate BRL to underperform after c.bank meeting - Citi * Mexico peso up after cenbank extends credit measures * EM c.bank bond buying could risk reputations, credit ratings-S&P By Susan Mathew Sept 16 (Reuters) - Brazil's real stayed near six-week peaks on Wednesday ahead of an interest rate decision, while Argentina's peso plumbed further into record low territory after the central bank tightened currency controls. The peso opened almost 0.1% weaker at 75.25 per U.S. dollar, traders said, and the country risk rose 38 basis points to 1,157. The Merval stock index sank 4.5% to a 10-week low. In a bid to protect Argentina's dollar reserves, the central bank tightened controls on buying dollars in the foreign exchange market, transactions involving dollar-denominated bonds and credit card purchases made in foreign currency. "This strategy, however, may only provide some temporary relief if rapid monetization of fiscal spending remains the norm," said Credit Suisse's heads of Latam economics, Juan Lorenzo Maldonado and Alberto J Rojas. The government on Tuesday also unveiled an ambitious budget, targeting a fiscal deficit of 4.5% of gross domestic product in 2021 and an economic rebound of 5.5%, as the economy struggles in a third straight year in recession. Brazil's real rose 0.4%. At market close, the central bank is seen holding its benchmark Selic rate at a record low of 2%, and adopting a neutral view. "The reinforcement of their latest forward guidance strategy and intent to preserve levels of monetary stimulus for the foreseeable future would be helpful to settle the jitters in the rates space and provide the environment to see bull flatteners doing well," said FX strategists at Citigroup. "In the event that the central bank does amp up its concerns with fiscal risks... that would stymie the chances of the curve flattening," they said, adding that they don't see the real underperforming given their view that the bank's communication will stress a stable Selic path ahead. The decision will follow a highly anticipated policy announcement by the U.S. Federal Reserve at 2 pm ET (1800 GMT). The dollar was weaker as investors expect the Fed to keep interest rates low for a prolonged period under a newly adopted framework that promises to shoot for inflation above 2% to make up for periods where it is running below that target. Mexico's peso neared six-month peaks after the country's central bank on Tuesday extended measures designed to strengthen credit channels and provide liquidity in the financial system. S&P Global on Wednesday said emerging market central banks could risk their reputations, sovereign credit ratings and even full-blown economic crises if their bond buying is pursued beyond the coronavirus crisis. Key Latin American stock indexes and currencies at 1423 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1118.01 0.48 MSCI LatAm 2005.49 -0.08 Brazil Bovespa 99959.84 -0.34 Mexico IPC 36729.15 -0.41 Chile IPSA 3700.70 -0.56 Argentina MerVal 42613.70 -4.514 Colombia COLCAP 1200.11 0.54 Currencies Latest Daily % change Brazil real 5.2681 0.38 Mexico peso 21.0869 0.27 Chile peso 760.9 0.28 Colombia peso 3712.02 -0.62 Peru sol 3.5377 0.26 Argentina peso 75.2400 -0.07 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Andrea Ricci)
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