In this article
The short answer for savers
You should keep savings in a foreign currency only if you live in a high-inflation economy or have specific future expenses in that currency. For everyone else, the risk of exchange rate swings usually outweighs the benefits of diversification. If your local currency is stable, the costs of moving money back and forth often eat up any potential gains from a stronger foreign exchange rate.
Our data shows that over long periods, even stable currencies move significantly. For example, the euro has appreciated 0.7% against the dollar over the last decade, though it experienced significant swings within that period. While that sounds small, the swings within those years were much larger. If you had converted dollars to euros at the wrong time, you could have seen your savings drop by 10% or more in a single year. You should only consider foreign currency savings if you have a specific future expense in that currency — like a house in Italy or tuition in London — or if you are managing a very large portfolio that needs to be spread across different economies.
Psychologically, it is difficult to watch your savings balance fluctuate every day based on events happening thousands of miles away. A sudden political shift or a central bank announcement can change the value of your holdings in seconds. Unless you are prepared for that volatility, keeping your emergency fund in your local currency is usually the smarter move for peace of mind. The euro's 12-month range alone, from 1.1122 to 1.1992, shows how much value can shift while you wait.
Why the dollar is a lifeline in Turkey and Argentina
In countries where the local currency is failing, the US dollar acts as a secondary, unofficial national currency. In Turkey, the lira has lost a staggering amount of value, with the USD/TRY rate climbing +1,503.1% in just 10 years. Today, 1 dollar buys 50.02 lira, a level that would have been unimaginable a decade ago. When prices in the grocery store change every week, holding a stable asset like the dollar is the only way to ensure you can still afford bread and rent next month.
Argentina faces a similar reality. The dollar has risen +1,452.6% against the Argentine peso over the last 5 years. This is a classic case of currency devaluation driven by high inflation. In these environments, people don't save in foreign currency to get rich; they do it to stay level. They often keep physical cash under mattresses or in offshore accounts because they lack faith in the local banking system. For these savers, the risk of the dollar losing value is tiny compared to the certainty of their local currency losing value.
In Buenos Aires or Istanbul, prices for big-ticket items like cars or apartments are often quoted directly in dollars. This dollarization of the economy happens when the local unit can no longer function as a reliable store of value. If you live in such an environment, diversification isn't a luxury; it's a requirement. You can see how the dollar's dominance affects global prices in our guide on why the US dollar rules the world. Our live USD to TRY converter shows the daily reality of this shift.
| Year | Average | High | Low | Change |
|---|---|---|---|---|
| 2015 | 2.7249 | 3.0647 | 2.2817 | — |
| 2016 | 3.0243 | 3.5352 | 2.7918 | +11.0% |
| 2017 | 3.6451 | 3.9644 | 3.4043 | +20.5% |
| 2018 | 4.8398 | 7.0111 | 3.7340 | +32.8% |
| 2019 | 5.6811 | 6.1780 | 5.1919 | +17.4% |
| 2020 | 7.0259 | 8.5250 | 5.8594 | +23.7% |
| 2021 | 8.8947 | 16.77 | 6.9606 | +26.6% |
| 2022 | 16.56 | 18.72 | 13.07 | +86.2% |
| 2023 | 23.79 | 29.50 | 18.69 | +43.6% |
| 2024 | 32.95 | 35.34 | 29.45 | +38.5% |
| 2025 | 39.24 | 42.99 | 35.34 | +19.1% |
| 2026 YTD | 46.13 | 50.02 | 42.97 | +17.6% |
Change = yearly average vs. the previous year's average.
The Swiss franc as a safe haven
If you are looking for stability rather than just escaping a crisis, the Swiss franc is the traditional choice. Switzerland's economy is built on low inflation and a massive trade surplus, which tends to make its currency appreciate over time. Over the last 10 years, the US dollar has fallen 30.6% against the franc. This means that if you had moved $10,000 into francs a decade ago, your purchasing power in dollar terms would have grown significantly without you doing anything at all.
However, being a safe haven doesn't mean the franc only goes up. In the last month, the USD/CHF rate moved −1.6%. Central banks also occasionally intervene to stop their currency from becoming too strong, as it hurts their exporters. If the franc becomes too expensive, Swiss watches and chocolate become too pricey for the rest of the world to buy, which hurts the Swiss economy. This creates a ceiling on how much the currency can grow.
If you decide to hold francs, you are betting that the Swiss economy will remain more disciplined than the rest of the world. It is a popular strategy for the wealthy, but for a casual saver, the entry requirements for Swiss bank accounts can be high. Many Swiss banks charge maintenance fees for small foreign accounts that can outweigh the currency gains. You can read more about this in our deep dive into why the Swiss franc is a crisis currency.
1 USD = 0.8171 CHF · mid-market rate · Full USD/CHF converter and history →
Interest rates and the carry trade trap
It is tempting to move savings to a country where banks offer double-digit interest rates. This is essentially what professional traders call the carry trade. They borrow money in a low-interest currency and save it in a high-interest currency. But there is no such thing as a free lunch. Usually, a currency offers high interest rates because it is risky or because inflation is high in that country.
If you put your money in a Turkish bank to get a high interest rate, you have to worry about the lira dropping +18.9% in a year, which it has done recently. That drop would completely wipe out any interest you earned. In fact, you could end up with significantly less than you started with when you convert back to your home currency. High interest is often just compensation for the high probability that the currency will lose value against the dollar or euro.
For most people, the goal of savings is safety, not speculation. When you chase high interest rates in foreign currencies, you are no longer saving; you are trading. Professional desks have algorithms to exit these positions in milliseconds if the market turns. As an individual saver, you likely won't be fast enough to react to a sudden devaluation. If you want to understand how these forces interact, see our explanation of how interest rates move currencies.
- CHFSwiss franc−0.9%
- EUREuro−2.4%
- ARSArgentine peso−4.7%
- TRYTurkish lira−15.9%
Tax and practical hurdles
Finally, there is the paperwork. In the US and many other countries, the tax authorities treat foreign currency as property. If you buy euros, the exchange rate goes up, and you sell those euros back for a profit in dollars, you may owe capital gains tax. Keeping track of every conversion for your tax return can be a nightmare, especially if you make multiple small transfers throughout the year. The administrative burden alone is enough to deter many casual investors.
Beyond the tax bill, many foreign banks are hesitant to open accounts for non-residents due to strict anti-money laundering laws. You might find yourself locked out of your money or facing high monthly maintenance fees that eat into your principal. In some cases, you may be required to fly to the country in person just to sign paperwork or close the account. These practical hurdles make traditional foreign banking difficult for the average person.
A better alternative for many is a multi-currency digital account. These allow you to hold different currencies without the high fees of traditional banks, making it easier to hedge against a strong US dollar if you feel your home currency is at risk. Ultimately, foreign currency savings should be a tool for a specific purpose, like future travel or protecting against a collapsing local economy, rather than a casual way to try and beat the market. Stick to your local currency for your emergency fund.
Frequently asked questions
Is it safe to keep my savings in US dollars if I live abroad?
Generally, yes. The US dollar is the world's primary reserve currency and tends to be more stable than most emerging market currencies. However, you face inflation risk if the dollar loses value and exchange rate risk if your local currency suddenly strengthens. For many in volatile economies, the dollar is the safest place to be, but it is not a guaranteed profit maker.
Which currency is the most stable for long-term savings?
The Swiss franc is widely considered the most stable. Over the last 10 years, the Swiss franc has appreciated 30.6% against the US dollar. Other strong options include the Singapore dollar and the euro, though the euro experiences more volatility. No currency is perfectly stable; all are subject to the economic policies of their respective governments.
Do I have to pay taxes on foreign currency gains?
In many countries, including the US, you are required to pay capital gains tax if you profit from a change in exchange rates. This applies when you convert the foreign currency back into your home currency or use it to buy something. It is vital to keep records of the exchange rates on the days you bought and sold the currency.
Can I open a foreign currency account at my local bank?
Many major banks in the UK, Canada, and Australia offer multi-currency accounts, but they are less common for retail customers in the US. Even when available, these accounts often have lower interest rates and higher fees than standard accounts. Digital-first banks and specialized money transfer services often provide better rates and lower friction for holding multiple currencies.
How much of my savings should be in a foreign currency?
Financial advisors often suggest that for most people, 0% is the right amount unless you have foreign expenses. If you are looking to diversify, some experts suggest a cap of 5% to 10% of your liquid net worth. For those in high-inflation countries, that percentage is often much higher out of necessity to preserve wealth.