As the Argentine peso collapses, locals are turning to crypto. Having lost 50 percent of its value against the U.S. dollar this year, the peso continues to slide. Evidence suggests Argentines are looking to cryptocurrency as a store of value, just as their counterparts in Venezuela are doing, with Dash and bitcoin both benefiting from the flight to quality.
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Argentine Peso Collapses As Economy Worsens
The peso, in what was once the world’s wealthiest nation, has plunged 33 percent over the past four days. Interest rates now sit at an eye popping 60 percent — up from 45 percent a week ago — as the government tries to shore up its economy with austerity measures. Inflation in Argentina was over 30 percent in July. The recent peso price plunge will only have worsened that figure.
President Mauricio Macri announced emergency measures on Monday, hoping to ease concerns among international investors and Argentines alike. The announcement came within days of the central bank hiking rates.
New Government, Old Woes
The Macri government was welcomed by both locals and international creditors after the decade-long populist governments of Néstor Kirchner and his successor-wife Cristina Fernández de Kirchner defaulted on debts and brought the country to its knees at the same time. Macri’s December 2015 election was premised on shoehorning market-oriented structural reforms into the economy.
Analysts appear to be unimpressed with Macri’s latest measures. Local financial news publication Ambito Financiero calls the government’s diagnosis of Argentina’s financial problems inaccurate and measures to cure the country of its ills insufficient:
Peer-to-Peer Bitcoin Exchange Volumes Increasing
As reported late last month by Bitsonline’s William Peaster, interest in cryptocurrencies in Latin America is climbing, with turbulent economies seeming to be the driving force. This is despite some South American governments taking a hard-line against crypto.
Chile’s banking system has taken active measures to prevent cryptocurrency exchanges from operating. Venezuela’s Maduro government has forced local banks to use the Petro as a unit of account in a move designed to shake non-state controlled cryptos out of the economy.
Peer-to-peer bitcoin exchange service, Localbitcoins, has seen a spike in activity in Chile, Argentina, Peru, and Venezuela over the past few months.
Notoriously volatile cryptocurrencies appear to be increasingly viewed as a safer haven for storing value than perpetually failed fiat currencies beholden to ineffective governments with appalling monetary policy credentials.
Have your say. As the Argentine peso collapses, is government ineptitude — which affects most of the world’s population today — going to become the force that ultimately drives people into the warm embrace of cryptocurrencies?
Images via Pixabay
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