Argentina's Central Bank hiked its benchmark interest rate from 45 to 60 percent on Thursday in a dramatic but fruitless bid to shore up the peso, which plunged to a record low against the dollar.
Despite the bank's extraordinary measure to impose one of the world's highest benchmark rates, the currency lost a further 13.5 percent by the close — its biggest daily loss of the year.
The Argentine currency has now lost 53 percent of its value since the beginning of the year, to trade at 39.87 to the dollar. It was worth around 18 to the dollar at the start of the year.
But the Merval index on the Buenos Aires stock market jumped 5.34 percent to 26,754.85 points on the back of a 13.5 percent rise in the share price of Brazilian petroleum giant Petrobras.
The weakening peso made stock prices tempting and drove sales.
Earlier Marcos Pena, President Mauricio Macri's cabinet chief, was forced to deny the government was facing an economic disaster.
“We are not facing economic failure,” said Pena.
“This is a transformation, not failure. In that transformation there are difficult moments,” he said.
Ratings agency Moody's said the Central Bank's move “is a clear signal that economic policy approaches have not been sufficient to contain the financial pressures facing Argentina.”
Crisis gripped the South American giant's economy over the previous 24 hours.