Argentina has been struggling for a long time with inflation and a currency that keeps losing value against the U.S. dollar.
Argentina, which has one of the world’s highest crypto adoption rates, saw the price of dollar-pegged stablecoins skyrocket across exchanges on Saturday following the surprise resignation of its Economy Minister, Martin Guzman.
The minister’s surprise departure, disclosed on his Twitter account on July 3 via a seven-page letter, threatens to further destabilize an already troubled economy grappling with high inflation and a falling national currency.
According to Criptoya data, the cost of purchasing Tether (USDT) in Argentine pesos (ARS) via the Binance exchange is currently 271.4 ARS, a 12 percent premium from before the resignation announcement and a 116.25 percent premium compared to the current fiat exchange rate of USD/ARS.
Other USD-pegged stablecoins, such as Dai (DAI), Binance USD (BUSD), Pax Dollar (USDP), and Dollar on Chain (DOC) have seen a similar increase, according to the local crypto price tracking website.
Argentines are flocking to cryptocurrency as a hedge against growing inflation and the continuous depreciation of the Argentine peso versus the US dollar.
In 2016, before inflation took its toll, one USD could only buy about 14.72 Argentine pesos. Six years later, however, one USD can buy as much as 125.5 ARS.
The additional premium on US-dollar pegged stablecoins is the result of a law enacted on September 1, 2019, known as Decree No. 609/2019, which makes it nearly impossible for Argentinians to exchange more than $200 in greenbacks per month at the official exchange rate.
It was enforced to keep the Argentine peso from plummeting amid a failing economy.
According to Trading Economics, the annual inflation rate in Argentina increased for the fourth consecutive month in May, reaching 60.7 percent.
According to Statista, the South American country has the sixth-highest adoption rate in the world, with over 21% of Argentineans expected to have used or owned cryptocurrency by 2021.
It could be recalled that in May, crypto adoption in Argentina reached 12%, double that of Peru, Mexico, and other nations in the area, owing mostly to citizens seeking a haven from growing inflation.
In addition to Bitcoin, Argentinians are increasingly turning to stablecoins as a means of keeping value in US dollars.