Argentina's Central Bank announced Thursday it has raised its benchmark interest rate from 45 to 60 percent in a bid to arrest a slide in the value of its currency.
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.
The sell-off left the peso trading at around 39 to the dollar.
Crisis has gripped the South American giant's economy over the previous 24 hours. Macri had on Wednesday unexpectedly requested an acceleration to the IMF funding of $50 million agreed in June. The government has already drawn down a first tranche of $15 billion - some of which has been used to try and prop up the peso.
A statement from the president aimed at calming the markets appeared to have done the opposite after his request - effectively to get early access to the remaining $35 billion of the loan - sent the peso plummeting almost 7.0 percent by the close. Despite explicit support from the International Monetary Fund for his policies, the peso opened a further 4.0 percent lower on Thursday - prompting the Central Bank's intervention.
The Bank pledged to keep interest rates unchanged at 60 percent until at least December.
The IMF's backing alone failed to bolster the currency, which has lost more than 45 percent of its value against the dollar since the beginning of the year.
IMF chief Christine Lagarde said Wednesday she had agreed to Macri's request to speed up disbursement of the loan in a bid to shore up Argentina's battered economy.