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EMERGING MARKETS-Argentine peso skids on FX controls; rate decision eyed in Brazil

    * 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)
  

Nuestros Estándares: Los principios Thomson Reuters.

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