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Economy minister’s resignation threatens a struggling economy battling high inflation in Argentina

  • News
  • July 4, 2022
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Argentina, a country with one of the highest crypto adoption rates in the world, saw the price of dollar-pegged stablecoins surge across exchanges on Saturday after the unexpected resignation of its Economy Minister, Martin Guzman. 

The minister’s shock departure, confirmed on his Twitter account on July 3 via a seven-page letter, threatens to further destabilize a struggling economy battling high inflation and a depreciating national currency.

As reported by Criptoya, the cost of buying Tether (USDT) using Argentinian pesos (ARS) is presently 271.4 ARS through the Binance exchange, which is around a 12% premium from before the resignation declaration, and a 116.25% premium compared to the current fiat exchange rate of USD/ARS.

The local crypto price tracking website has also exposed a similar jump in other USD-pegged stablecoins, including Dai (DAI), Binance USD (BUSD), Pax Dollar (USDP), and Dollar on Chain (DOC).

Argentineans have been piling into crypto as a means to hedge compared to the country’s rising inflation and a continued fall of the Argentinean peso against the USD dollar.

In 2016, before inflation really took its clang, one USD was only able to buy around 14.72 Argentinean pesos. Though, six years later, one USD is able to buy as many as 125.5 ARS.

The extra premium on US-dollar pegged stablecoins is the result of a law passed on September 1, 2019, called Decree No. 609/2019, which has made it effectively impossible for Argentinians to exchange more than $200 in greenbacks per month at the official exchange rate.

It was forced as a means to stop the Argentinean peso from free-falling amid a struggling economy. In May, the Argentinean annual inflation rate accelerated for the fourth straight month, hitting 60.7%, as reported by Trading Economics.

The South American nation has the sixth-highest adoption rate internationally, with around 21% of Argentineans estimated to have used or owned crypto by 2021, according to Statista.

In May, Cointelegraph reported that “crypto penetration” in Argentina had touched 12%, double that of Peru, Mexico, and other countries in the region, mainly driven by citizens seeking safe haven against rising inflation.

Additionally Bitcoin, Argentineans have been turning to stablecoins gradually as a means of storing value in the United States dollar.

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