- The Argentine peso has plunged to a record low and become worthless.
- Other currencies like the Nigerian naira and Turkish lira have all slipped.
- Some analysts believe that cryptocurrencies like BTC and USDT are the solution.
Emerging and frontier market currencies are not doing well even as the US dollar index (DXY) retreats. The Argentine peso has plunged to 250 against the dollar. It has plunged by more than 104% in the past 12 months and by over 800% in the past five years. The currency has dropped in all weeks since May 2020.
Zimbabwe dollar, Nigerian naira plunge
Other emerging market currencies have also plunged. The Turkish lira has crashed to a record low of 24. This means that the USD/TRY pair has soared by over 27% this year and 400% in the past five years, making lira one of the worst performers in the emerging markets.
The Nigerian naira has also plunged to a record low even after Dangote unveiled its oil refinery. The USD/NGN pair soared to a high of 690 from the month-to-date low of 461. While this is the official rate, the black market exchange has crashed to over 800.
The second coming of the Zimbabwe dollar has also faced significant headwinds as it crashed by more than 50% this year alone. Other emerging market currencies like the Kenyan shilling, Pakistani rupee, and Lebanon pound have all plunged.
The impact of the collapse of these currencies has been dire considering that holders have seen their wealth disappear. For example, a Nigerian person who had 100k NGN in 2020 had $250. Today, the same person has the equivalent of $140. As such, the currency depreciation is leading to unprecedented poverty.
Is crypto the solution?
All this means that cryptocurrency investors have done better than holders of these currencies. For one, Bitcoin has risen by more than 300% in the past 5 years. Therefore, it makes sense to invest in key cryptocurrencies like Bitcoin and Litecoin.
A better option would be for residents of these countries to change their savings into foreign currencies like the US dollar and the euro. Most importantly, it is possible to change their currencies into stablecoins like Tether and USD Coin.
Cryptocurrencies have their own risks. For example, FTX and Voyager Digital customers saw their crypto holdings disappear. There are also regulatory and volatility risks. In terms of volatility, we have seen the price of Bitcoin retreat from near $70,000 to about $25,000 today.
Read more: How to buy Tether.
