How to protect
your money from
currency devaluation.

The silent problem: what devaluation actually is

Currency devaluation happens when a country's currency loses value against other currencies — particularly against the US dollar, which remains the world's reserve currency. In practical terms: if today $1 USD equals 4,200 Colombian pesos and in two years it equals 5,000, your peso savings lost international purchasing power without anyone touching them.

For investors across Latin America, this isn't theory — it's historical reality. The Colombian peso has lost between 5% and 8% of its value against the dollar annually on average over the past decade. A $10,000,000 COP savings account that doesn't move loses the equivalent of $500,000 to $800,000 in real value every year from devaluation alone, on top of local inflation.¹

4 strategies to protect yourself

There's no single solution — the right answer depends on your profile, time horizon and available capital. Here are the main strategies, from simplest to most complex:

Strategy 1 — Dollarize part of your savings

The most direct way to protect against devaluation is to hold a portion of your savings in dollars or other hard currencies. Historically, the USD, EUR and Swiss franc have been effective stores of value against emerging market currency devaluations.

The question isn't whether to dollarize, but how much. A practical rule for Latin American context: hold between 30% and 50% of your savings in hard currency if you have a savings horizon of more than 2 years — especially if you plan to make dollar-denominated purchases in the future (travel, education, technology, international investments).

Strategy 2 — Digital USD accounts

Until recently, holding dollars from Colombia required foreign bank accounts or complex paperwork. Today there are apps that allow you to hold USD balances in a fully digital, regulated and accessible way:

Littio is a regulated Colombian fintech that allows you to hold balances in USDC — a stablecoin backed 1:1 by the US dollar — and earn yield on that balance. It's one of the most accessible ways to dollarize savings from Colombia without needing a foreign bank account.²

ARQ Finance, formerly known as DolarApp, lets you open a USD account with an international Mastercard debit card. It's especially useful for those who make frequent dollar purchases or need a hard-currency account for everyday use.

Strategy 3 — Invest in international assets

The most robust long-term protection against devaluation isn't just holding dollars — it's investing in dollar-denominated assets that also generate returns. An S&P 500 ETF gives you USD exposure to the 500 largest US companies, meaning that if your local currency devalues, the value of your investment in local currency automatically increases on top of the market return.

For a Latin American investor, this translates into a double hedge: asset growth in USD plus a favorable conversion effect when the local currency depreciates.

Strategy 4 — Real assets with USD pricing

Real estate in tourist zones or areas with high international demand, commodities and physical assets priced in dollars also work as devaluation hedges. This strategy requires more initial capital but has historically been effective across Latin America.

How much to dollarize? A practical framework

Risks to keep in mind

• Local appreciation risk: If your local currency strengthens, your USD assets are temporarily worth less in local terms.
• Platform risk: Fintechs like Littio and ARQ are newer than traditional banks. Always verify they are regulated by the relevant financial authority in your country.
• Liquidity risk: Some USD instruments have lower liquidity — always maintain enough in local currency for emergencies.
• Conversion costs: Converting local currency to USD has a spread cost that varies between platforms. Calculate the real cost before comparing returns.

Building a truly devaluation-resistant portfolio

Dollarization is the first layer of protection. The second is genuine portfolio diversification — not just across currencies but across asset types, geographies and sectors. A truly resilient portfolio combines:

• Local liquidity (emergency fund in local currency)
• USD savings (Littio, ARQ or foreign account)
• International asset investments (ETFs via IBKR)
• Optionally: real estate or real assets with USD-denominated demand

This combination doesn't eliminate currency risk, but distributes it so that no single macroeconomic event can erode your entire wealth at once.³

This article is for educational purposes only and does not constitute personalized financial, currency or investment advice. Exchange rates, returns and platform features mentioned may vary. Always verify current regulations and consult a certified professional before making important financial decisions.