Stocks plunged more than 10% at the start of trading, prompting circuit breakers to kick in and halt dealings.
President Temer was forced to deny a newspaper report that he had given consent to paying off a witness in a huge corruption scandal.
The Supreme Court has authorised an investigation into the allegations.
On Thursday Mr Temer said in a TV statement: “I never authorised any payments for someone to be silent. I did not buy anyone’s silence. I fear no accusations.”