The peso closed up 0.88pc at 59 per dollar in official trading after the government authorized currency controls on Sunday, an about-face by President Mauricio Macri, who had previously lifted many protectionist practices of his predecessor, Cristina Fernandez de Kirchner.
The peso fell about 0.79pc in black market trading, underscoring a loss of trust in the official price, while Argentine dollar bonds and euro-denominated bonds slumped to new lows.
However, its benchmark stocks index rose more than 6pc to record its biggest percentage gain in nearly three weeks.
The central bank is now authorized to restrict purchases of dollars as it burns through reserves to prop up the peso, which fell nearly 5pc in the opening hours of trading, but staged a turnaround.
The controls followed the peso's drop in August to its worst month on record after Standard & Poor's, Fitch and Moody's downgraded Argentina's debt, citing growing risks of a default after the government announced plans to "re-profile" some $100 billion in debt.
"On ARS, it appears that authorities will keep it stable now. Capital controls are not necessarily FX negative, but liquidity disappears," Citi's Dirk Willer wrote in a client note.
"Clearly local markets have become uninvestable again. Index providers are also likely to take note."
The peso has been battered since Macri suffered a thumping defeat in primaries at the hands of Alberto Fernandez, on fears that the return of a leftist government could herald a new era of interventionist policies.
MSCI's index of Latin American stocks shed over 1pc with stocks in Mexico leading losses after a survey showed activity in the country's manufacturing sector shrank for a third consecutive month in August.
Brazilian shares edged lower and the real dropped 0.8pc despite upbeat factory activity numbers and a slightly higher-than-expected trade surplus in August.
The sentiment was fragile as the United States began imposing 15pc tariffs on a variety of Chinese goods on Sunday and China retaliated by setting duties on US crude oil.
With US markets closed for holiday, trading volumes were thin across the board.