Argentine Peso has taken another turn for the worse after the country’s central bank announced new Argentine foreign currency rules. The restrictive new rules governing foreign exchange transactions have put renewed pressure on Argentine Peso which was already struggling to hold on its own amid the pandemic.
New foreign currency regulations caused an immediate 10 percent plunge in the Peso. It’s not the plunge that is driving the market. What is more unfortunate is that people have lost trust in the national currency and looking for alternate financial channels. Bitcoin has emerged as the ‘De Facto’ choice for Argentinians who want to preserve their wealth, transact safely, and tide over the country’s economic challenges.
Argentine foreign currency rules will only weaken Peso further
The Argentine economy is facing precarious times and is riled by financial challenges. The economy is in shambles after decades of wrong government policies and administrative blunders. The official statement about Argentine foreign currency rules says that the latest foreign exchange rules are aimed to promote a transparent flow of foreign exchange into the country.
In simple terms, the announcement states that the Federal Administration of Public Revenues (AFIP) will now impose 35 percent taxes on individual assets and income of a person transacting in foreign currency including card purchases. The guidelines aim to discourage foreign currency hoarding and prevent the Peso decline.
Bitcoin will be the eventual savior of Argentinians
The instant 10 percent decline in Peso’s value soon after the new regulations were announced shows that citizens are fast losing faith in the fiat money. Argentine foreign currency rules will only push people towards cryptocurrencies.
Emiliano G. Arnáez, a journalist by profession, shares that successive policy failures have deteriorated the citizen’s trust in Peso. Bitcoin has entered to fill the void left by Argentine Peso by offering secure, transparent, and reliable financial services.
Argentine citizens have realized that cryptocurrencies are not governed by fallible central banks. Stablecoins represent a certain sense of stability as they are backed by suitable assets. Even though cryptocurrencies are volatile, the Argentine economy is in far worse shape right now.
People are gravitating towards a safe storehouse of value. Bitcoin has emerged as a clear winner where fiat has failed.