Argentina has been struggling against increasing inflation for a long time now. Its Peso has been falling helplessly against the US Dollar. Argentina has one of the highest rates of crypto adoption in the world.
What a Resignation Foretells
>> Try the #1 AI Trading Robot - Click Here <<
The country witnessed a sharp rise in the price of dollar-pegged stablecoins over the weekend. The stablecoin price rose across exchanges as the Minister of the Economy resigned abruptly.
Martin Guzman’s seven-page resignation was made known through his Twitter page on Sunday. The development further threatens the shaky economy and the less valued currency.
As reported by Criptoya, buying Tether (USDT) with the Argentine Peso now costs 271.4 ARS. This is on Binance, and it represents a 12% premium that was before Guzman resigned. And it is a 116.25% premium in comparison to the present USD-ARS exchange rate.
Criptoya also showed there is a jump in the other stablecoins pegged with the USD. These include DAI, Binance USD, Pax Dollar, as well as Dollar on Chain.
Argentines have been running into crypto as a way of mitigating the economic downturn. They believe it’s a hedge against inflation and the Peso’s fall against the US Dollar.
The Good Old Days
One US Dollar only bought 14.72 ARS in 2016 before inflation began to hit. But six years down the line, one US Dollar is buying 125.5 ARS.
The extra premium on stablecoins pegged to the USD is due to a recent law. The law passed on the 1st of September 2019 is tagged Decree No. 609/2019. It makes it nearly impossible for Argentines to exchange over $200/month at the official rate.
The law was implemented to guide against the free fall of the Argentine Peso. In May, the annual inflation figure increased for the fourth consecutive month. As reported by Trading Economics, the figure hit 60.7%.
Argentina has the sixth-highest rate of cryptocurrency adoption in the world. 21% of Argentines were estimated to either use or own crypto as of 2021. The report was made public by Statista.
Cointelegraph reported the crypto penetration in the country as 12%. This is double the figure in Mexico, Peru, and other South American countries. The high adoption is basically motivated by citizens’ search for refuge from inflation.
As they do with Bitcoin, Argentines have been running to stablecoins at a high rate. It is a means for them to store monetary value in US Dollars.