The Argentine peso on Wednesday fell to its weakest ever while stocks tanked after index provider MSCI unexpectedly decided not to include the country in its emerging markets index.

MSCI said it needed more signs that center-right President Mauricio Macri's pro-market reforms were "irreversible" to reincorporate the country's shares into its Emerging Markets Index.

Macri has repealed the capital controls and foreign exchange restrictions that drove MSCI to downgrade Latin America's No. 3 economy to "frontier" status.

Argentina's benchmark Merval stock index fell nearly 5 percent, its biggest daily decline since January 15, with all components in negative territory. Shares of Pampa Energia SA led the losses, dropping 8.5 percent.

The index had risen nearly 25 percent in 2017 as traders anticipated increased inflows from funds tracking the MSCI index. As those expectations faded, the peso weakened 1 percent to a record low.

"There is no longer any rush for passive funds to get in, and those who have been buying in advance of an expected reclassification will probably now look to take some money off the table," strategists at Itaú BBA wrote in a note to clients.

However, "we still have a positive view of the current domestic dynamics in Argentina, both political and economic."

Trading in other Latin American markets was skittish, tracking volatility in commodity prices.

The Mexican peso inched up 0.2 percent, rebounding from a sharp decline on Tuesday, but falling crude prices kept a lid on gains.

Brazil's benchmark Bovespa stock index rose 0.2 percent as shares of miner Vale SA tracked iron ore higher. Shares of meatpacker Minerva SA fell 1 percent after Reuters reported a judge blocked the $300 million purchase of JBS SA's South American assets. Shares of JBS rose 0.8 percent.