Argentine citizens are using stablecoins to hedge their savings amid recent instability created by the resignation of some key members of the government. Late last week, the country’s economy minister resigned along with others, causing an uproar that sent the price of the country’s stablecoin up 11% on several exchanges.
Argentina’s Political Uncertainty Causes Dollar-to-Peso Exchange Rate to Plunge
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The rate at which Argentine citizens convert their currency, the Argentine peso, into dollars has plummeted due to the political and economic uncertainty that the country is currently facing. The resignation of Economy Minister Martin Guzmanhas also come as a shock, as he was one of the biggest architects of the debt restructuring that the country signed with the International Monetary Fund (IMF).
Guzman’s resignation also resulted in the resignation of other important officers of the ministry, including Ramiro Tosi, Roberto Arias, and Rodrigo Ruete. This led to the exchange rate of the U.S. dollar peso reaching record numbers on different cryptocurrency exchanges, according to
BloombergOn the Binance exchange, the rate reached 257 Argentine pesos, a 6.6 percent increase. On the Lemon Cash exchange, prices rose 11% to 279 pesos.
Inflation and devaluation are driving Argentines toward foreign currencies and crypto
This situation has led Argentines to rush to exchange their pesos for foreign currencies like the U.S. dollar or dollar-pegged stablecoins like theUSDT. Even with the inauguration of new Economy Minister Silvina Batakis
, the market has not recovered to previous rates. According to local media, the exchange rate has fallen further to 280 pesos to the dollar and reached the 300 pesos to the dollar level on some exchanges.
In addition, the volume of stablecoin transactions also increased significantly. Some operators reported a 500% increase in volume traded during parts of the weekend, with most traders attempting to take advantage of arbitrage opportunities in anticipation of a traditional market rally.
The digital dollar exchange rate outperformed the physical dollar exchange rate, indicating that Argentines prefer to purchase these variants because of the ease with which they can be redeemed for other commodities and the different uses they have compared to dollar bills. This trend is consistent with a survey conducted by Americas Markets Intelligence in April, which found that 12% of the population is invested in crypto and 18% are interested in investing in crypto.
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