Does dollarizing your savings actually protect them?

Direct answer: converting to dollars partially protects savings. It shields you from local-currency devaluation, which is the biggest risk in many Arab economies. But the dollar itself loses value to US inflation every year, so it preserves relative — not absolute — purchasing power.

What the dollar protects against

• Local devaluation: strong protection — this is the main reason people dollarize.
• Capital flight risk: a globally accepted, liquid currency.

What it does not protect against

• US inflation: the dollar buys a little less each year.
• Idle erosion: dollars under the mattress still lose ground over decades.

The better frame

Dollars are excellent for stability and near-term needs. For long-horizon savings, pairing them with an inflation-resistant store of value like gold covers both risks.