The more than 7 percent fall in the peso was its biggest one-day decline since the currency was allowed to float in 2015, prompting central bank interventions and investor concern that the third-largest Latin American economy may not meet its debt obligations.

However, Argentina's MerVal stock index maintained enough liquidity to rise more than 1 percent.

Brazil's Bovespa stock index also rose over 1 percent, favored by lower risk aversion abroad.

In Mexico, the peso dipped in morning trading before firming 0.64 percent, boosted by optimism after Canada rejoined talks to salvage the trilateral North American Free Trade Agreement (NAFTA).

The country's benchmark S&P/BMV IPC index closed up 0.33 percent, with investors keeping an eye on the ongoing discussions with Canada.

"Investors are waiting for a successful conclusion of the renegotiation of NAFTA," Banco Base said in a report.

Canadian Prime Minister Justin Trudeau said on Wednesday it would be possible to meet a Friday deadline to reach an in-principle agreement set by US President Donald Trump.

After more than a year of talks, Mexico and the United States announced a bilateral deal on Monday, clearing the way for Canada to rejoin talks to update the 24-year-old NAFTA which accounts for over $1 trillion in annual trade between the three nations.

In Chile, the peso strengthened nearly 2 percent, while its stock index gained slightly, boosted by airline LATAM. Its shares climbed 3.8 percent after announcing that it would lay off some 1,200 airport-based employees in Brazil in an apparent cost-cutting measure.