In today’s global economy, the U.S. Dollar stands tall as one of the world’s most prized currencies. Its enduring stability and intrinsic value make it a preferred choice for those looking to hedge their savings against inflation. Although the US Dollar often suffers from inflation too, the negative impact is most times, not as bad as local currencies. This is one reason why many people opt to save in dollars (e.g. purchasing and leaving their money in USDT or PYUSD on Bitmama). Need more reasons why you need the U.S. Dollars? Read on!
What are the disadvantages of saving in your local currency
When you hear people say they prefer to save in U.S. Dollars, it’s best to believe that they do it for a reason. There are so many disadvantages to saving in your local currency. Some of these disadvantages include:
1. Impacts of inflation
Inflation is a measure of the increase in the prices of goods and services in an economy. Generally, inflation has a negative impact on the economy of any country. Most local currencies are affected by inflation very often, compared with the US Dollars. So you have better chances of reducing the impact of inflation on your savings when you save in US Dollars.
Imagine you save in Naira or Cedis and the economy experiences inflation, the value of your savings would reduce drastically. However, your money will be more protected if sac=ving in US dollars.
2. Unregulated currency supply
Some countries create economic problems for themselves by printing and circulating their local currency so much that it starts to lose its value. Since scarcity is one factor that makes money valuable, it becomes a problem when money is too much in circulation.
When some governments fail to control the amount of their local currencies in circulation, it can lead to economic problems like hyperinflation. Although this situation is a popular occurrence in some countries, it is not as frequent in the U.S. The U.S. Federal Reserve is an organization that reduces the chances of hyperinflation by regulating the amount of U.S. Dollars in circulation.
When it comes to savings, you are better off saving in Dollars than in your local currency. Below are the top 5 reasons why you should save in Dollars today:
1. The U.S. Dollar is a global status currency
The US dollar has had a head start by being the most exchanged currency on global platforms. Essentially, this means that most global brands and international organizations will trade in Dollars. So although your currency will be accepted nationally, you still have to change it to Dollar if you want to trade on international platforms. From this, we can conclude that the US dollar is global and offers you lots of opportunities for easy use internationally.
2. It is a highly integrable currency
The US Dollar is a globally accepted currency used in numerous countries and different business platforms worldwide. In fact, it is a primary driver of global commerce and so flexible that a cryptocurrency was specifically pegged to it – Tether (USDT). For most people living outside the United States, dollar equivalents can easily be accessed as cryptocurrency by purchasing the US dollar-backed cryptocurrency (Tether). So it’s safe to say that the Dollar is a highly integrable currency.
3. It Is An economically viable currency
With a whopping $23 Trillion, the US economy is currently the biggest economy in the world. This means that the United States has a very robust and stable economy. Also, they hold a position as a crucial global economic power. All of these factors have contributed to making the Dollar economically beneficial.
The United States is also home to Fortune 500 companies like Facebook, Apple, and Tesla, which additionally offer dollar-denominated investment prospects for retail investors.
4. Protects against inflation
When the world’s economy experiences a large, unexpected turmoil or uncertainty, most people tend to seek financial safety by investing or saving in dollars. This is because the U.S. is not often affected by inflation. Also, this currency is likely to stay strong during times of global economic crisis, thereby protecting the value of your savings during these tough periods.
5. Cost Saving
Finally, it saves you from a lot of extra costs and expenses. Since most thriving software companies in the world are based in the US, most times online trades are executed in dollars. So saving your money in dollars will save you from paying a lot of exchange rate costs that may occur due to volatilities.
If you travel internationally at regular intervals, saving your money in dollars can deliver cost benefits because sourcing generally comes at a higher level of purchasing power abroad. As a strong currency, the dollar has a greater purchasing power compared to your local currency.
How can I save money in dollars?
There are primarily two legal ways you can save money in dollars as a Nigerian living in Nigeria. You can either decide to use a domiciliary account or make use of a Fintech app.
1. Open a Bitmama account
Bitmama offers the easiest way to save your money in dollars. Essentially, you need to open a Bitmama account, fund your wallet with your fiat currency, and purchase USDT. USDT is a stablecoin that is pegged and backed by the US dollar, therefore, your money is saved in dollars till when you need it.
You can easily convert it back to fiat and withdraw it into your bank account when you need it.
2. Use of domiciliary account
A domiciliary account is a kind of bank account in Nigeria that permits you to accept and deposit a wide variety of foreign currencies, including US Dollars. Essentially, a domiciliary (popularly known as dotm) account holder can save funds as Dollars while living in Nigeria and receive Dollar deposits from foreign accounts.
Although this type of account is not popular among Nigerians because of the rigid process involved in opening one, it is very safe to use. If you use a dorm account, you can rest assured that your money is very secure since a commercial bank is involved.
Ultimately, while there are so many benefits of saving in U.S. Dollars, feel free to explore the top 5 reasons why you should save in Dollars in this article. As a Nigerian, one major benefit of saving in dollars is that it protects you from inflation. This means that even if your local currency loses value, you remain unaffected because your savings in dollars will not lose value. So hurry up and start saving in dollars today to get the best value out of your money in the future.