USD Stablecoin Premium Soars After Argentine Economy Minister Resigns
Prices for the dollar-pegged stablecoin in Argentina, one of the world's most cryptocurrency-using countries, surged across exchanges on Saturday following the abrupt resignation of Economy Minister Martin Guzman.
The minister confirmed his sudden resignation in a seven-page letter posted on his Twitter account on July 3. Argentina is facing the challenges of high inflation and depreciation of the national currency, and the departure of the economic minister may further aggravate the instability of the domestic economy.
According to data from Criptoya, the current cost of buying Tether (USDT) with Argentine pesos (ARS) through the Binance exchange is 271.4 ARS, which is a premium of about 12% compared with the current USD/ARS legal exchange rate. %.
Local cryptocurrency price-tracking sites also showed similar surges in other dollar-pegged stablecoins, including Dai (Dai), Binance USD (BUSD), Pax Dollar (USDP) and Dollar on Chain (DOC).
Argentines have been buying cryptocurrencies in large quantities as a hedge against rising domestic inflation and the continued depreciation of the Argentine peso against the dollar.
In 2016, a dollar could only buy about 14.72 Argentine pesos before inflation really took its toll. However, after 6 years, $1 can buy as much as 125.5 ARS.
The additional premium for dollar-pegged stablecoins is the result of a law passed in Argentina on September 1, 2019. The law, known as Decree No. 609/2019, makes it nearly impossible for Argentines to exchange more than $200 worth of U.S. dollars per month at the official exchange rate.
This was implemented as a means to prevent the freefall of the Argentine peso amid economic distress. Argentina's annual inflation accelerated for the fourth straight month to 60.7% in May, according to Trading Economics.
According to Statista statistics, by 2021, about 21% of Argentines use or own cryptocurrencies, and Argentina's cryptocurrency usage rate ranks sixth in the world.
In May, Cointelegraph reported that Argentina’s “cryptocurrency penetration rate” had reached 12 percent, double that of Peru, Mexico and other countries in the region, largely as citizens sought safe havens against rising inflation.
In addition to bitcoin, more and more Argentines are also turning to stablecoins as a means of storing value in U.S. dollars.