coincodex.com
Key highlights:
- After the resignation of Argentina's economy minister on Saturday, there was a spike in demand for stablecoins
- USD-pegged stablecoins trade at a premium in the country
- Argentina has been dealing with rapid currency devaluation
The resignation of Argentina's economy minister drove demand for stablecoins
The resignation of Argentina’s economy minister Martin Guzmán caused a spike in demand for stablecoins in the Argentinian market.
Stablecoins are used by some in Argentina as a safe haven from the rapid devaluation of the local currency, the Argentine peso (ARS). ARS has decreased by 18.5% against USD since January 1.
On the Argentina-based Ripio cryptocurrency exchange, the price of USD Coin spiked from ARS 238.6 to ARS 258.2 on July 2, the day that Guzmán resigned. The price climbed a bit further, and USD Coin is now changing hands at ARS 265.2 on the exchange.
Ripio CEO Sebastian Serrano told CoinDesk that crypto markets are the first to respond to significant news events due to their 24/7 nature:
“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.”
Per the CoinDesk report, the Buenbit cryptocurrency exchange saw its trading volume jump by 300% on Sunday, with increased activity in the DAI stablecoin being used to obtain loans in ARS.
Several exchanges in the country responded by introducing large bid/ask spreads to protect themselves until markets open on Monday, and a more solid reference for the price of the US dollar can be established.
In Argentina, there is a large discrepancy between the official ARS/USD exchange rate and the informal rate between the two currencies. At the time of writing, 1 USD would fetch you approximately 250 ARS on the informal market, while you would only get about 125 ARS according to the official exchange rate.
The price of USD-pegged stablecoins in Argentina roughly follows the informal ARS/USD exchange rate, but with an added premium.