Argentina, a country with one of the highest cryptocurrency adoption rates in the world, saw the price of stablecoins pegged to the US dollar rise on exchanges on Saturday following the abrupt resignation of its Economy Minister Martin Guzman.
The shocking departure of the minister, confirmed on his Twitter account on Sunday in a seven-page letter, threatens to further destabilize a struggling economy struggling with high inflation and the devaluation of the national currency.
According to data from Criptoya, the cost of buying Tether (USDT) using Argentine pesos (ARS) is currently 271.4 ARS through the Binance exchange, which represents a premium of around 12% prior to the waiver announcement and a premium of 116.25% to the current USD/ARS fiat exchange rate.
Local cryptocurrency price tracking website also revealed a similar jump in other dollar-pegged stablecoins, including Dai (DAI), Binance USD (BUSD), Pax Dollar (USDP) and Dollar on Chain (DOC).
Argentinians are investing in cryptocurrencies as a means of hedging against the country’s rising inflation and a continuing drop in the Argentine peso against the dollar.
In 2016, before inflation really took its toll, one dollar could only buy about 14.72 Argentine pesos. However, six years later, one dollar can buy up to 125.5 ARS.
The extra premium of dollar-pegged stablecoins is the result of a law passed on September 1, 2019, called Decree No. official.
It was imposed as a means of preventing the Argentine peso from free-falling amid a struggling economy. In May, Argentina’s annual inflation rate accelerated for the fourth consecutive month, reaching 60.7%, according to Trading Economics.
The South American nation has the sixth highest adoption rate globally, with around 21% of Argentines estimated to use or own cryptocurrencies by 2021, according to Statista.
In May, Cointelegraph reported that “cryptocurrency penetration” in Argentina reached 12%, double that of Peru, Mexico and other countries in the region, mainly driven by citizens seeking refuge from rising inflation.
In addition to Bitcoin, Argentines have increasingly turned to stablecoins as a means of storing value in US dollars.
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