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Following the Saturday resignation of Argentine economics minister Martin Guzmán amid an economic crisis, Argentines acquired two to three times as many stablecoins as they buy on an average weekend, according to crypto firms in the country.
The purchasing value of the Argentine peso (ARS) has plunged over the past year as inflation soars. According to three major crypto exchanges, people are trying to hedge against a possible depreciation of the ARS.
Following Guzman's departure, the peso dropped by around 15% against the stablecoins DAI and tether on the platforms of many of the biggest local exchanges. Over the weekend, the value of both stablecoins surged from ARS 245 on Friday to ARS 280. (As a result of the selection of Silvina Batakis to replace Guzman as the next minister of economy, tether quotes on Argentine markets increased to ARS 303 per coin late on Sunday)
Due to the 24/7 nature of crypto, this is the first market where Argentina looks for a price for the U.S. dollar whenever there is one of these news items in Argentina. This increases volumes,” Sebastian Serrano, CEO of Ripio, an Argentine cryptocurrency exchange, told CoinDesk.
Guzmán’s departure is the latest result of a dispute between Argentine President Alberto Fernandez and Vice President Cristina Fernández de Kirchner over the country’s economic path, which in May saw inflation increase by 60 percent annually.
Moreover, Argentina’s central bank is running out of foreign currency reserves, which, among other effects, hinders imports.
The Argentine exchange Buenbit saw a 300 percent increase in trading volume on Sunday compared to the same day in previous weeks, the company told CoinDesk, adding that “many people” used their DAI as collateral to obtain loans in Argentine pesos and purchase more DAI as protection against a potential peso devaluation.
Local news outlets have not ruled out the potential that the government may declare a foreign exchange holiday on Monday to calm markets.
Due to the lack of price references for the U.S. dollar over the weekend, most Argentine exchanges extended their bid-ask spreads to 18 percent, although they are typically under 2 percent.
The creator of the Latin American-focused crypto education platform DefyEducation, Pablo Sabbatella, tweeted on Sunday, “Exchanges added a giant spread so that people don’t trade, and they [the exchanges] hedge against tomorrow’s opening price.”
“Due to demand and without a reference replacement price, prices rose and spreads widened,” tweeted Andrés Vilella Weisz, head of trading and strategy at the Argentine crypto exchange Lemon Cash, adding that after Guzman’s departure, demand for crypto dollars was high.
