In countries relying on the US dollar for international trade and with shaky national currencies, cryptocurrencies seem to be a really good alternative for income protection. One of the biggest examples of it is Peru where political and economic instability create a good environment for crypto trading fueled by the desire of locals to invest in cheaper and more reliable alternatives.
Peru does not have easy access to international currencies. Local citizens usually use the services of specialized independent dealers who operate outside of the national bank jurisdiction and offer more palatable rates to their customers. Peruvians cannot just go and purchase USD, they have to pay extra fees and taxes meaning that accumulating foreign currency is something that many locals simply cannot afford to do.
The political climate in the country is also not inducing any serenity in Peruvians. The nation has lived through 7 different presidents since the beginning of 2011 and all of them were accused of corruption and mismanagement. The central bank is struggling to keep inflation under control. It made impressive promises and aimed at limiting year-to-year inflation to just under 3%, but its plans have fallen apart dramatically.
In July, the Peruvian government reported a 1% inflation which adds up to the Y2Y inflation of 9.3% which is three times higher compared to the goal set up by the Central bank. As of right now, the government can keep the US dollar from growing against the local currency, but it may not be possible in the nearest future with inflation soaring to new heights.
Amidst these events, Peruvians move their savings to crypto. Several exchanges operating in the region have a cumulative number of active monthly users of over 1.4 million. Buda.com, one of the biggest crypto exchanges, sees a daily trading volume of over $22 million which is massive for the Peruvian economy. At the same time, several exchanges are focusing on stable coins like USDT and nuPen (a stablecoin pegged to Peruvian sol) which enjoy the highest popularity among traders in Peru.
