The South American country has been battling high inflation and monetary instability for decades. Its problems seem to have deepened since yesterday (July 3) the Minister of Economy – Martin Guzman – resigned from his post.
Amid this economic turmoil and to preserve their wealth, Argentines showed greater interest in stablecoins. Multiple cryptocurrency exchanges, including Binance and Lemon Cash, informed that the cost of buying Tether (USDT) using Argentinian pesos (ARS) surged significantly.
Crypto Might be the Answer
One of the biggest countries in South America and a former economic giant – Argentina – has not been in its best shape in recent years. While during the first three decades of the 20th century, the nation was among the 10th wealthiest states per capita across the globe, things look quite different in the past 40 years.
Inefficient production, dictatorship regimes, and huge foreign debt caused galloping inflation. In fact, Argentina hasn’t had a single-digit inflation rate in at least a decade. The global financial turmoil prompted by the COVID-19 pandemic, the military conflicts, and the energy crisis has logically made things worse.
In 2019, the government appointed Martin Guzman as a Minister of Economy. During his reign, he managed to reduce Argentina’s public foreign debt while struggling citizens received much-needed bonuses and food cards.
However, in May, the inflation rate in the country soared to over 60%. At the same time, shortages of diesel fuel and pressure from the left political wings led to Guzman’s resignation yesterday.
Somewhat expectedly, some Argentines shifted their sight towards crypto, and more specifically, stablecoins pegged to the US dollar due to the depreciating national currency. Data from CryptoYa revealed that the price of Tether (USDT) measured in ARS spiked on numerous exchanges. The cost of buying the product on Binance is around 270 ARS, while the price on Lemon Cash is nearly 295 ARS.
It is worth noting that Argentina is among the countries with the highest cryptocurrency adoption rate. According to a research conducted by Chainalysis, the nation ranked 10th, surpassing China, Brazil, South Africa, and Russia.
Turks Also Turned to USDT
Another country that battles high inflation is Turkey. Its national currency crashed significantly against the dollar last year, and months later, it still cannot restore its previous levels. To overcome the issues and preserve their savings, Turks turned to Bitcoin and Tether. Since its pegged 1:1 with the USD, the latter allows people to purchase the closest available option of the greenback but on the blockchain.
It would sound more logical that locals would first turn to gold as it is the country’s most important and widely employed investment instrument before dealing with crypto. Not long ago, though, the government urged the population to turn over its precious metal holdings to help support the economy.