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Argentina, a country with the highest approval rate for cryptocurrencies in the world, saw the price of dollar-pegged stablecoins skyrocket on exchanges on July 2 after Economy Minister Martin Guzman unexpectedly announced his resignation.
Economy Minister Martin Guzman has resigned unexpectedly.
The minister confirmed his resignation on his own Twitter account on July 3 through a seven-page letter. This risks further destabilizing an economy that is struggling to combat high Inflation and a devalued national currency.
According to data from Criptoya, the cost of purchasing Tether (USDT) in Argentine pesos (ARS) is currently 271.4 ARS through binance exchange, about 12% higher than before the resignation announcement and a premium of 116.25% compared to the current Fiat exchange rate of USD/ARS.
The local cryptocurrency price tracking website has also revealed a similar jump for other usd-pegged stablecoins, including Dai (DAI), Binance USD (BUSD), Pax Dollar (USDP) and Dollar on Chain (DOC).
Argentines have poured money into cryptocurrencies as a means to protect against the country's rising inflation and the continued decline of the Argentine peso against the US dollar.
In 2016, before inflation actually hit, a dollar could only buy about 14.72 Argentine pesos. However, six years later, a dollar can buy up to 125.5 ARS.
Usd stablecoin premiums rise sharply
Additional premiums for stablecoins pegged in U.S. dollars are the result of a law passed on Sept. 1, 2019, known as Decree No. 609/2019, making it virtually impossible for Argentines to exchange more than $200 per month at the official exchange rate agency.
It was imposed as a measure to prevent the Argentine peso from falling freely amid a struggling economy. In May, Argentina's annual inflation rate rose for the fourth month in a row, hitting 60.7%, according to Trading Economics.
The South American country has the sixth highest adoption rate globally, with about 21% of Argentines estimated to have used or owned cryptocurrencies by 2021, according to Statista.
In May, Cointelegraph reported that the "cryptocurrency penetration rate" in Argentina has reached 12%, double that of Peru, Mexico and other countries in the region, mainly driven by citizens seeking safe-haven assets, against the rise of inflation.
In addition to Bitcoin, Argentines are increasingly turning to stablecoins as a means of storing value in U.S. dollars.
>> See also: The EU officially passed the law on cryptocurrency assets.
