The peso was up around 1.5 percent to 44.45 per dollar by midday local time on Friday, traders told Reuters, who said it had been buoyed by official interventions in the market and higher interest rates on short-term "Leliq" notes.
Argentine bonds and the peso have been hammered this week as uncertainty over a biting recession and high inflation frayed investor nerves about political upheaval in Latin America's No. 3 economy ahead of elections this year.
The rise will come as welcome relief for Argentine President Mauricio Macri after a week in which domestic media has run blanket coverage about a renewed crisis, threatening to derail his plans for re-election and bolstering his political rivals.
The recession-hit country spiraled into crisis last year that forced Macri to take a $56.3 billion credit line from the International Monetary Fund. In 2018 the peso lost half its value against the dollar and inflation was close to 50 percent.
The peso fell 2.48 percent on Thursday after a 3.53 percent slide the day before, while yields on government bonds have spiked as investors grew jittery.
Most economists said the market turmoil had been linked to a poll earlier in the week that suggested Macri's arch rival, populist ex-President Cristina Fernandez de Kirchner, could beat the pro-market leader in an election run-off.
MACRI VS MARKET
Macri defended the government's economic reforms on Thursday, saying they had established an independent central bank and a balanced budget versus money printing and fake data. He added change took time and volatility was to be expected.
"The markets are different, they are types who are behind a computer in a faraway place, who buy, sell and have a short-term, opportunistic vision," he said in comments made to local radio and circulated by his office.
"There is a huge majority of Argentines who do not want to go backwards and who want to go into the future."
Macri's fortunes are likely to rest on what happens in the economy over the next months, including bringing down inflation that was 4.7 percent in March and is running at a 12-month rate of close to 55 percent - driving investors out of the peso.
Morgan Stanley said in a research note it thought the market price of the peso was "too pessimistic," but it preferred to "wait on the sidelines" given stubbornly high inflation and a hard-to-call election race.
That may leave little upside for the peso.
"With inflation continuing to rise and the domestic economy still suffering it is hard to paint a picture where ARS (Argentine peso) rallies significantly," Rabobank strategist Christian Lawrence said in written comments.
"The elections are of course key but there are concerns that Macri is essentially trying to fight 'kirch with kirch' by adopting populist policies in an attempt to woo voters tempted to return to the days of pre-Macri."