Sep 18, 2020 17:16 UTC
Sep 18, 2020 at 17:16 UTC
The Argentine peso plunged by more than 10% soon afterward the country’s central bank publicized measures to tighten controls on the movement of foreign currency. The peso, which is officially pegged at 72 for every USD, affected new lows of 145 to the greenback on the black market. The most recent plunge is understood as a additional boost to bitcoin and another cryptocurrencies in a country that has been plagued by currency trials for in excess of a century.
Quiet, in a statement out on its website in Spanish language , the Board of the Central Bank of the Argentine Republic explains the new measures by stating that they are an effort “to promote a more effective allocation of foreign currency.” Loosely translated, the statement goes on to say:
Federal Administration of Public Revenues has established a ‘mechanism for the assembling of taxes personal assets as well as on income at a rate 35% for external asset formation operations by individuals and on purchases with cards whether debit card and credit card in a foreign currency.
The purposes of the new measures are to ‘maintain the current quota of $200 per month at the same time as discouraging the hoarding foreign currency and card expenses’.
Crisis laden Argentina is in its third year of an economic recession partially responsible on the country’s unmaintainable outside debt levels. BCRA admits that the servicing of these duties is having an undesired consequence on country’s exchange rate.
So, the new measures also pursue to “establish guidelines for a renegotiation of the private external debt compatible with the normal operation of the exchange market.”
Though, as formerly stated by news.Bitcoin.com, Argentina together with Venezuela, are two Latin American countries that are sighted their sanction currencies lose value because of extreme printing of money which causes inflation.
Mentioning a Chainalysis study, the similar report records that Argentina’s imposition of limits on the amount of U.S. dollars that citizens can buy per month additionally restricts available options of shielding savings from inflation. According to analysts from the region like Sebastian Villanueva of Chilean crypto exchange, Satoshitango, it is such limits that are helping to spur on the use of cryptocurrencies in the country.
The Chainalysis study already ranks Argentina as the country with the third-highest value of cryptocurrency received between July 2019 and June 2020, just under $3 billion.
Meanwhile, some Argentine citizens reacting to the announcement by BCRA concur with the notion that the latest policy changes will push more towards cryptocurrencies. One citizen who shares this perspective is journalist, Emiliano G. Arnáez. The journalist has previously tweeted how successive Argentinian governments have failed the economy and how bitcoin can be an alternative that his countrymen can use.
In his remarks, Arnáez touts how the main attributes of bitcoin make the digital currency a better alternative to the country’s fiat currency:
“Remember: if you have Bitcoin, they have their own Central Bank. With cryptocurrencies, there are no stocks, with stablecoins, there are no exchange restrictions. They (cryptocurrencies) have a high risk, of course, they do, but the Argentine economy sometimes seems to be riskier and is (repeatedly) hacked by the governments themselves.”
Another Twitter user, Ramiro Marra confirms the immediate impact BCRA’s announcement after tweeting that the “crypto dollar is already at 160. It is going to be a very difficult day.”
The comments by Argentine citizens reaffirm Villanueva’s earlier assertions that “people just want a safe way to store money, and there are no gatekeepers in crypto.”