Argentina’s government is imposing stricter measures to prevent access to foreign exchange reserves. As a result, Bitcoin price on one of the country’s local exchanges is currently trading at a 25 percent premium.
Trading Jobs Cut Boosts Bitcoin Price
Shifting politics, economic uncertainty, and stricter forex controls have led Argentine banks to eliminate trading desk jobs. According to the Buenos Aires Times,
Banks started by cutting senior roles amid concerns on their budgets for the year ahead and that a Fernández government may put limits on layoffs. Among the biggest blows to the sector were delays on the payment of local notes and FX controls, which limit banks’ ability to trade futures.
The economic turmoil is having a significant effect on the cryptocurrency market, namely Bitcoin price. Consequently, Argentine traders are paying over 25 percent for the main cryptocurrency. Specifically, as of this writing, Ripio, one of the main local crypto exchanges, is showing Bitcoin price at ARS 691454.97, which is around $11,600.
Earlier today however, a redditor posted Bitcoin price on the exchange broke as high as $12,759 – representing a 38% premium compared to other global exchanges.
Incoming Administration Supports Latest Forex Controls
The economic situation in Argentina is becoming increasingly precarious. According to data from the World Bank, the local currency devalued significantly in 2019. Annual inflation reached over 50%, while the GDP contracted 2.5% in 2018, and another 2.5% in the first six months of 2019.
Some observers suggest that Argentina, one of the largest Latin American economies, might be heading towards another economic crisis. And, to avert the crisis, the administration of the outgoing President Macri is imposing stricter protectionist controls. The Wall Street Journal explains,
To make up the difference, Argentina often prints money that fuels inflation or borrows dollars from abroad or both. Because it is a protectionist economy closed to free trade and riddled with inefficient companies, it struggles to generate enough dollars through exports to pay its dollar debts.
Before leaving the presidency, Macri is taking last-minute measures to stave off the looming financial crisis. One of them is hardening foreign currency restrictions. Indeed, the latest control imposed by the Central Bank of Argentina (BCRA) forbids Argentines to purchase more than $200 a month.
These measures are likely to be maintained by the new administration to be headed by Alberto Fernandez, who will take office on December 10, 2019. Indeed, according to La Nación, Fernandez approves of the latest economic measures that the outgoing administration is imposing.
How do you think restrictions in Forex can impact Bitcoin’s price? Let us know your comments below.
_________________________________________________________________________
Images via Shutterstock, Ripio.com, Reddit source @Moustache_Group