Saving in dollars when your currency is falling

Savings kept in a currency that’s losing value shrink with it. Inflation takes a little every month; a devaluation can take a large part in a day. Holding US dollars is how millions of people step out of the way, and it works against the currency. It doesn’t always work against the country. Governments have frozen dollar deposits and turned them into local money, and every way of holding dollars fails in its own way.

What a falling currency does to savings

Cases from the last decade, in official figures:

• Venezuela, 2018. Prices rose 130,060% in the year, according to the country’s central bank.
• Lebanon, from 2019. The pound had lost more than 98% of its pre-crisis value by February 2023, and inflation averaged 171% in 2022, according to the World Bank.
• Turkey, 2021 to 2023. Prices rose 85.5% in the 12 months to October 2022, according to TurkStat, the statistics office. At the central bank’s rates, the lira lost about three-quarters of its value against the dollar between the end of 2020 and the end of 2023.
• Argentina, 2023. Prices rose 211% in the year, according to INDEC, the statistics office. At the central bank’s official rate, the peso lost 78% of its value against the dollar over the year, and 54% on a single day in December.
• Nigeria, 2023 and 2024. By the IMF’s figures, the naira lost about 70% of its value against the dollar between May 2023 and February 2024, and by March 2024 prices were rising 33% a year, a pace not seen in 28 years.

Put another way, savings worth 1,000 dollars in naira in May 2023 were worth about 300 dollars nine months later.

Why people reach for the dollar

Some countries have given up their own currency for it. In 1999, inflation in Ecuador reached 61% and the sucre lost two-thirds of its value, according to the IMF, and the next year Ecuador adopted the US dollar. El Salvador did the same in 2001, and Panama has used the dollar since 1904. In Zimbabwe, where hyperinflation had set in by 2007, the national currency went out of circulation in the second half of 2008 as people demanded foreign money instead, and in 2009 the government allowed any traded foreign currency as legal tender; people used mainly the US dollar, an IMF working paper records.

Where it isn’t official, people do it themselves. A third of the deposits in Ecuador’s banks were already in dollars in early 1998, and about 45% a year later, the IMF found. In Lebanon, the World Bank estimated the part of the economy run in dollar bills at 9.9 billion dollars in 2022, almost half of the country’s output. Between half and two-thirds of all US dollar bills are held outside the United States, according to estimates cited in a Federal Reserve paper.

Digital dollars have joined them. In Latin America, stablecoins made up nearly a third of the value of crypto sent across borders by June 2026, according to Chainalysis. In Sub-Saharan Africa, by its count, the value of stablecoins received through peer-to-peer channels grew more than sixfold from 2022 to 2026, to 14.6 billion dollars.

Dollar bills at home

Cash is out of reach of any bank freeze, and it works when banks and cards don’t. But nothing brings it back. A theft, a fire or a flood takes it for good, and a counterfeit note is a loss for whoever accepted it. Savings at home also make the home a target: the guide on wrench attacks is about crypto, but its advice to say less about what you hold applies to cash too.

Where buying dollars is restricted, they also cost more. At the end of October 2023, a dollar on Nigeria’s parallel market cost over 40% more than at the official rate, according to the IMF.

Dollars in a local bank

A dollar account at a bank in your own country is easy to use, and the deposit may be insured. The risk isn’t the dollar. It’s the country:

• Argentina, 2001 and 2002. In December 2001, a decree capped cash withdrawals at 250 dollars a week per person at each bank and barred most transfers abroad: the corralito. In February 2002, another decree converted every dollar deposit in the country’s banks into pesos, at a rate the government set. The peso had just come off the currency board that kept it fixed to the dollar, and by the end of 2002 it had lost about 70% of its value against it, at the central bank’s rate.
• Ecuador, 2000. When the country adopted the dollar, the deposits in its banks were frozen, and institutions holding 65% of them had been taken over or closed, according to the IMF.
• Lebanon, from 2019. Banks restricted withdrawals, in dollars as well as pounds. In August 2022, a man held the staff of a Beirut bank hostage to get more than 200,000 dollars of his own savings, for his father’s hospital bills. In September, a woman walked into another Beirut bank with her nephew’s toy pistol and left with about 13,000 dollars of her family’s deposits, for her sister’s cancer treatment. Depositors held up at least four more banks that week, and the banks then closed for three days, AFP reported.

Deposit insurance doesn’t help with this. It pays when a bank fails, up to a limit, as the FDIC describes it in the United States, and a freeze or a conversion by decree isn’t a bank failure. Where the limit is set in local money, it shrinks with it: in 2024, the IMF advised Nigeria to raise its coverage to reflect inflation and the naira’s fall.

An account abroad

A dollar account in another country takes savings out of reach of your own country’s banks. It brings problems of its own:

• It’s hard to open, and it can be closed. In a 2022 report by the European Banking Authority, banks said they typically turn away new customers, or drop existing ones, with links to countries considered high-risk, individuals from those countries included. If the bank decides your country has become one, the account can end.
• Money has to cross a border to reach it, with fees each way; the guide on getting paid from abroad has what bank transfers cost. And a government that controls its currency can stop money leaving: Argentina’s 2001 decree did, and in Lebanon, by 2022, ordinary customers could no longer send money abroad, AFP reported.
• It’s reported home. Under an OECD standard, tax authorities automatically exchange information on the financial accounts held by each other’s residents. In 2024, developing countries received information on 53 million accounts, worth 2.7 trillion euros, from their exchange partners, according to the OECD.

Digital dollars

Digital dollars are tokens a company issues against reserves it holds: USDT, from Tether, and USDC, from Circle, are two of them. They need no bank account: anyone with a phone and an internet connection can hold them, and send them across a border at any hour. In a 2026 test by Italy’s central bank, money sent between countries through USDC reached the other side’s bank account in under 20 minutes where both countries had instant bank payments.

What can go wrong:

• They aren’t a bank deposit. US law says payment stablecoins aren’t guaranteed by the government or covered by deposit insurance. When holders doubt the issuer, the price can slip below a dollar: USDC traded as low as 86 cents in March 2023, after a failed bank trapped part of its reserves, according to the Federal Reserve. That’s counterparty risk, and the slip is a depeg. The guide on digital dollars explains who stands behind them.
• The issuer can freeze them. It can block an address, and the digital dollars in it can’t move, whoever holds the key. Tether’s terms for USDT and Circle’s for USDC both leave it to the issuer’s “sole discretion.”
• A lost key or a failed exchange can lose them. In a wallet you control, whoever has the key has the money; on an exchange, you hold the exchange’s promise. The guide on custody has what happened when those promises broke.
• Getting in and out costs money. In the same test, the whole trip, from one currency into USDC and out into another, cost from 0.30% to nearly 9% of the amount. The guide on getting paid in digital dollars breaks it down.
• Some countries restrict them. Turkey has barred the use of crypto assets in payments since April 2021. Nigeria’s central bank barred banks from serving crypto businesses from 2021 until December 2023, and in early 2024, as the naira fell, the authorities moved against crypto exchanges again.

Interest on dollars is a loan

A platform that pays you interest on dollars is lending them to someone. Celsius, which paid rewards on deposits in exchange for the right to lend them, froze withdrawals in June 2022. TerraUSD, a token meant to stay at a dollar and advertised as paying as much as 20% through a related platform, had fallen close to zero the month before, according to the SEC. The guide on custody and the entry on stablecoins have what followed.

Side by side

	Dollar bills at home	Dollars in a local bank	An account abroad	Digital dollars in a wallet you control
Who can freeze or take them	Whoever finds them, or forces you to hand them over	The bank, or the government by decree	The bank abroad; your own government can stop you sending money to it	The issuer, in any wallet, and whoever gets your key
What can lose them	Theft, fire, a counterfeit note	A freeze, a forced conversion, a bank failure beyond the insurance	A closed account, a bank failure beyond the other country’s insurance	A lost key, a failed exchange if it holds them, the issuer failing
What getting in and out costs	The parallel market’s premium, where there is one: over 40% in Nigeria in October 2023	The bank’s exchange rate and fees	An international transfer each way	From 0.30% to nearly 9% in a 2026 central bank test
How fast you can reach them	At once	In banking hours, while withdrawals are allowed	As fast as a transfer abroad, if one is allowed	Minutes, at any hour

What about bitcoin?

Bitcoin isn’t a dollar. Its value in dollars rises and falls, sometimes sharply, so it can’t do a dollar’s job for money you may need soon.

What to do

Dollars protect savings from the currency. Protecting them from the country takes more than one way of holding them.

• Split your savings between ways that fail for different reasons. Cash at home is safe from a bank freeze but not from a thief; a local bank, from a thief but not from a decree; an account abroad, from your own country’s banks but not from the foreign bank closing it; digital dollars, from banks and borders but not from a lost key or the issuer. No single one covers everything.
• Keep at home only what you’d need in an emergency, and don’t talk about it.
• Don’t keep everything in a local bank, dollars included. In Argentina, Ecuador and Lebanon, dollar deposits were trapped just when people needed them.
• Count the cost of the whole trip before you move savings: what you pay to get dollars, in any form, and what you’ll pay to turn them back into money you can spend.
• Hold digital dollars in a wallet you control, and keep savings in a setup that passes the test in the guide on hardware wallets, multisig and collaborative custody. No setup protects digital dollars from their issuer.
• Turn down interest on dollars. Someone is borrowing them, and you’re the lender.