Temer was caught on tape encouraging a prominent executive to pay a monthly fee to keep jailed former House Speaker Eduardo Cunha silent in the country's biggest-ever graft probe, sources said on Wednesday, confirming a report in newspaper O Globo. Temer denied reports that he had authorized such payments.

Brazil's benchmark Bovespa stock index fell as much as 10.7 percent, triggering a temporary halt on trading. Shares of blue-chips Petr?leo Brasileiro SA, Banco Bradesco SA and Ita? Unibanco Holding SA subtracted the most points from the index.

The Brazilian real tumbled 7.5 percent to 3.38 to the dollar, its weakest since December 2016, driving the central bank to intervene in markets to cushion the currency's decline.

"The real trading at 3.10 was predicated on successful passage of pension reform and other structural reforms. That is no longer the base case," analysts at Brown Brothers Harriman wrote in a note to clients.

"As we've long complained, 3.10 was pricing in perfection. Now, in this imperfect situation, the big question is where should it trade now that this basic assumption of perfection has been turned on its head?"

Those concerns spilled over into other markets, with Argentine's main Merval stock index slumping. Mexican companies with exposure to Brazil, such as Am?rica M?vil and bottler Coca-Cola FEMSA, also tumbled.

Bets that US President Donald Trump could be forced out from office following reports that he sought to interfere with a federal investigation helped to drive all Latin American currencies lower.

Uncertainty over the implementation of his expanisionist pledges have weighed on demand for riskier, emerging market assets as investors scurried for the safety of US bonds.