Citizens of Argentina are hedging their savings by using stablecoins amidst the recent climate of uncertainty created by the resignation of certain key members of the government. The minister of economy in the country resigned last weekend, alongside other personalities, creating the turmoil that prompted the price of stablecoins in the country to rise by 11% on some exchanges.
Dollar-to-Peso Exchange Rate Plummets Due to Political Uncertainty in Argentina
The rate that citizens in Argentina use to exchange the native fiat currency, the Argentinian peso, for dollars, has plummeted due to the climate of political and economic uncertainty the country is currently facing. The resignation of economy minister Martin Guzman caused shockwaves, as he was one of the biggest articulators of the deal the country inked with the International Monetary Fund (IMF) to restructure the debt that the country has with the organization.
The resignation of Guzman also brought about demissions from other important officers of the ministry, including Ramiro Tosi, Roberto Arias, and Rodrigo Ruete. This made the exchange rate of pesos for U.S. dollars reach record numbers on different cryptocurrency exchanges. According to Bloomberg, the rate reached 257 Argentine pesos on the Binance exchange, a rise of 6.6%. On the Lemon Cash exchange, prices jumped 11% to 279 pesos.
Inflation and Devaluation Driving Argentinians to Foreign Currencies and Crypto
The situation has caused Argentinians to rush to exchange their pesos for foreign currencies like the U.S. dollar and also for dollar-pegged stablecoins like USDT. Even with the appointment of a new economy minister, Silvina Batakis, the market did not recover to its previous rates. According to local media, the exchange rate fell even lower to 280 pesos per dollar, even reaching the 300 pesos per dollar mark on some exchanges.
Furthermore, the volumes of stablecoins traded increased significantly. Some operators reported increases of 500% in volumes traded during some hours of the weekend, with most traders trying to anticipate the rise in traditional markets to take advantage of the arbitrage opportunities.
The exchange rate of the digital dollar went over the exchange rate of the physical dollar, showing that Argentinians prefer to purchase these variants due to the simplicity of trading them again for other goods and also for the different uses they afford compared to dollar bills. The movements are consistent with a survey conducted by Americas Markets Intelligence in April, which found that 12% of the population have invested in crypto, and 18% were interested in investing in crypto.
What do you think about the recent rise in demand and price of several stablecoins in Argentina? Tell us in the comments section below.