Argentina’s government is on the verge of a financial crisis. Their efforts to stablize the value of the Peso by limiting the allowed amount of foreign currency in possession of up to $10,000 has affected the Bitcoin’s price in Argentina.
Bitcoin is also suffering from weakened positions, as the entire crypto sector records lowered trading volumes. Despite the dip in Bitcoin’s price, Argentinian crypto exchanges are selling Bitcoin at over $1,000 from Bitcoin’s retail price of $10,347 as of press time.
At LocalBitcoins peer-to-peer platform the Bitcoin premium surpassed $1,000 as the coin traded for 655,000 ARS, which is around $11,200 USD.
The primary reason for the Bitcoin premium is that Argentinians are seeking shelter for their funds, amid currency controls imposed from Argentina’s government. The controls state that every exporter must get approval from Argentina’s Banco Central de la Republica Argentina before purchasing foreign currencies, such as the United States Dollar. The restrictive measures will be in force at least until the end of 2019.
The currency control leads to the rise of a black market for foreign currencies. For side-stepping regulations, however, individuals have to pay 5 pesos more – the unofficial black-market rate is 64 Pesos per USD, and the official exchange rate is 59 Pesos per USD.
The currency control comes after the Argentinian Peso lost nearly 25 percent of its value after the general elections on 27th October 2018. Argentina also battles double-digit inflation of over 55%.