Argentine citizens are hedging their savings using stablecoins amid the recent climate of uncertainty created by the resignation of some key members of government. The country’s economy minister resigned last weekend, along with other senior figures, creating the turmoil that caused the price of stablecoins in the country to rise by 11% on some exchanges.
The exchange rate of the dollar against the peso collapses due to political uncertainty in Argentina
The rate that Argentine citizens use to exchange the native fiat currency, the Argentine peso, for dollars has fallen due to the climate of political and economic uncertainty the country is currently facing. The resignation of Economy Minister Martin Guzman sent shockwaves, as he was one of the biggest articulators of the agreement the country signed with the International Monetary Fund (IMF) to restructure the debt that the country has towards the organization.
Guzman’s resignation also led to the resignation of other important ministry officers, including Ramiro Tosi, Roberto Arias and Rodrigo Ruete. This caused the exchange rate of the peso against the US dollar to reach record highs on different cryptocurrency exchanges. According to Bloomberg, the rate hit 257 Argentine pesos on the Binance exchange, up 6.6%. On the Lemon Cash exchange, prices jumped 11% to 279 pesos.
Inflation and Devaluation Drive Argentines to Foreign Currency and Crypto
The situation has caused Argentines to rush to exchange their pesos for foreign currencies like the US dollar and also for dollar-pegged stablecoins like USDT. Even with the appointment of a new economy minister, Silvina Batakis, the market has not returned to 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.
In addition, the volumes of stablecoins traded have increased significantly. Some traders reported 500% increases in trading volumes at certain times of the weekend, with most traders trying to time the rise in traditional markets to take advantage of arbitrage opportunities.
The digital dollar exchange rate has surpassed the physical dollar exchange rate, showing that Argentines prefer to buy these variants because of the simplicity of exchanging them again for other goods and also for the different uses they allow compared to dollar bills. The moves are consistent with a survey conducted by Americas Markets Intelligence in April, which found that 12% of the population had invested in crypto and 18% were interested in investing in crypto.
What do you think of the recent increase in demand and price for several stablecoins in Argentina? Tell us in the comments section below.
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