The global economic situation is at one of its weakest phases. On Saturday, Argentina’s Economy Minister, Martin Guzmán, resigned amid an ongoing financial crisis. Following his resignation, Argentines purchased 2 to 3 times more stablecoins to hedge against a potential devaluation of the Argentine Peso (ARS). The ARS’ purchasing power has plummeted over the past year. Moreover, inflation has skyrocketed in the country.
Three major crypto exchanges reported the development in the country. Buenbit, an Argentine exchange, reported a 300% increase in trading.
Most Argentine exchanges boosted the margins between the bid and ask prices to 18%, while usually, they are under 2%. This was because of the absence of price references for the U.S. dollar over the weekend.
Head of trading and strategy of the Argentine cryptocurrency exchange Lemon Cash, Andrés Vilella Weisz, took to Twitter and said,
“Due to demand and without a reference replacement price, prices rose and spreads widened.”
Meanwhile, Pablo Sabbatella, founder of DefyEducation, said on Twitter,
“Exchanges added a giant spread so that people don’t trade and they [the exchanges] hedge against tomorrow’s opening price.”
Guzman’s departure caused the peso to lose 15% of its value versus the stablecoins DAI and Tether. Both stablecoins increased from ARS 245 on Friday to ARS 280. Tether quotes on Argentine markets increased to ARS 303 per coin following the late Sunday selection of Silvina Batakis to succeed Guzman as the next minister of economy.
While speaking to CoinDesk, the CEO of Ripio, Sebastian Serrano, said,
“Whenever there is one of these news stories in Argentina, because of the 24/7 nature of crypto, it is the first market where Argentina starts to look for a price for the U.S. dollar. This drives volumes up.”
Guzman’s resignation is a repercussion of the altercation between President Alberto Fernandez and Vice President Christina Fernández de Kirchner. The fight is regarding the economic direction of the country. Argentina is facing one of its worst financial crises. In May, the country’s inflation saw a 60% spike, year-over-year.
Additionally, the central bank of Argentina is running low on foreign exchange reserves, which hurts imports, among other things.
Moreover, according to many local media sources, the government might declare a foreign exchange holiday on Monday to calm markets.