How Much of Your Company's Cash Should Be in Dollars

A finance lead who just converted half of the company's cash into dollars because the number felt reasonable does not have a treasury policy: they have a hunch dressed up as a decision. The question of how much to dollarize has no single answer, but it does have a method: map which part of the business is genuinely exposed to another currency, turn that exposure into numbers, and set a range that gets reviewed on a fixed cadence, not a figure chosen once and forgotten.

In Soulbit Academy we treat this question for what it is, a matter of proportion with a method behind it, not a choice between instruments or a single-country case. We already covered the available instruments, forwards, NDFs, options and natural hedging, in currency hedging for companies: a guide to the instruments, and the specific case of a Colombian SMB facing peso devaluation in dollar treasury for Colombian SMBs. This article does not repeat either one: here is the method for deciding what share of cash to dollarize, independent of the instrument later used to hold it. Soulbit is not a financial advisor, and the final share is a decision for the company and its advisor, not a recommendation of this article.

What partial dollarization means, and how it differs from choosing an instrument

Partial dollarization of a company's balance is the decision to hold a defined share of its cash in dollars or another foreign currency, instead of holding it all in local currency or converting it all into the foreign one. It is a matter of proportion, not all or nothing, and it comes before the instrument decision: before deciding whether that share is held as cash balance, a forward or an account abroad, a company has to decide how much of a share makes sense to hold in the first place.

Conflating the two decisions produces common mistakes. A company can pick the right instrument, a well structured forward, to cover a share of its cash that was never calculated with a method, overhedging one part of the business while leaving the part that actually mattered exposed. The rest of this article deals only with the first decision, how much to dollarize, not which instrument to use for it.

Why there is no universal correct percentage

There is no universal correct percentage of dollarization because currency exposure depends on each company's own mix of revenue, costs and debt, not on a general rule that applies across a sector. A January 2006 International Monetary Fund study documented that, by the end of 2001, deposit and loan dollarization exceeded 40% in countries such as Bolivia, Costa Rica, Nicaragua, Paraguay, Peru and Uruguay, and topped 90% in some of them, while other countries in the region stayed far below that level. If the right share varies that much between entire countries, it varies even more between companies within the same country.

Is there a recommended figure from the IMF or the Bank for International Settlements?

The International Monetary Fund and the Bank for International Settlements do not set a recommended dollarization figure for companies, because their research describes aggregate market patterns, not a prescription for an individual case. A Bank for International Settlements working paper published on 18 November 2025 finds that most firms hedge their currency exposure optimally by combining foreign currency assets with financial hedging, fitted to each firm's own structure rather than a single formula. Firms in emerging markets, the same paper notes, frequently use their foreign currency assets as a natural hedge against foreign currency debt, in addition to financial instruments.

The Colombian peso illustrates why a fixed figure ages poorly. It moved from around 1,860 per dollar in 2014 to a record 5,061 in November 2022, and by mid-2026 was trading back near 3,200, according to the historical exchange rate series published by Banco de la República. A percentage set in 2022 under the logic of that devaluation would have been oversized barely two years later, and a company whose revenue currency does not even match the peso, such as an exporter earning in dollars, starts from a different exposure altogether.

Step 1: map your currency exposures

The first step of the method is to identify, line by line, which part of the company's revenue, costs, debt and future commitments is denominated in a currency other than its functional one. Without that map, any percentage set afterward is a guess, not a calculation.

The four categories to review are foreign currency revenue, foreign currency costs, foreign currency debt and already signed future commitments with pending payment. Each is measured over a time horizon, not as a static figure on today's balance sheet.

Exposure category	What it includes	Example in a dollar-invoicing exporter
Foreign currency revenue	Invoicing to clients who pay in dollars or another currency	A coffee exporter invoicing a US buyer in dollars
Foreign currency costs	Inputs, software licenses or services contracted in foreign currency	Imported packaging paid in dollars to an overseas supplier
Foreign currency debt	Loans, credit lines or leases denominated in foreign currency	A working capital loan denominated in dollars
Future commitments	Already signed contracts with payment due on a later date	A packaging order with payment due in 90 days

Does a company with only local currency costs and no dollar debt still carry currency exposure?

A company that invoices entirely in dollars but pays its costs in local currency still carries full currency exposure, even without any dollar debt. Its exposure sits on the revenue side, not the cost side, and the method applies the same way: inflows in dollars are mapped instead of outflows, and the resulting net position is almost always positive rather than negative.

Step 2: calculate your net position in each currency

The net position in a currency is the difference between what the company holds or expects to receive in that currency and what it must pay in it within a defined horizon. A positive result means the company will end up with more of that currency than it needs to spend in it, and that surplus is what a treasury policy has to decide whether to convert, hold or partly both.

Just as an illustration, suppose Andina Exports SAC, a Peruvian coffee exporter invoicing its shipments entirely in dollars while paying payroll, rent and taxes in soles, expects 500,000 dollars in shipment revenue over the next quarter. It has 60,000 dollars in imported packaging costs committed for the same period and no dollar debt. Its net dollar position for the quarter is 440,000 dollars, the amount left over after covering its only dollar-denominated cost, before any of it gets converted into soles to fund local payroll and taxes. That figure, not a percentage picked at random, is what the next step turns into a policy.

Step 3: set a target range, not a fixed number

A target range, for example between 10% and 20% of operating cash in dollars, holds up better against exchange rate swings than a fixed number, because it does not force a conversion every time the actual share moves by a point. A single fixed figure, by contrast, turns every exchange rate move into a conversion order, with the cost that implies.

Following the example above, a reasonable target range for Andina Exports could sit between 10% and 20% of its operating cash in dollars, sized to keep a buffer against the next quarter's packaging costs and delayed shipment payments, while converting the rest into soles as payroll and tax dates approach. The exact figure depends on the company's own shipment cycle and should be validated with its own financial analysis, not a general rule from this article.

Approach	How it works	Risk if used alone
Fixed figure, for example always 30%	A single percentage is set and the balance is adjusted to hold it at all times	Forces buying or selling currency on every minor swing, with repeated conversion cost
Target range with bands, for example 20% to 40%	A minimum and a maximum are set, and action only happens once the balance leaves that range	Low if the range was calculated from the real net position; high if the range was picked without that calculation
No policy, case by case decisions	Each conversion is decided in isolation, based on the mood of the moment	The real share ends up driven by the day's judgment call, not the actual exposure of the business

Step 4: set a rebalancing threshold and a review cadence

The rebalancing threshold is the point at which the real share drifts far enough from the target range that the company acts to bring it back, and it has to be set before that happens, not during the pressure of a sharp exchange rate move. A typical threshold adds a band of roughly five percentage points around the target range, so a conversion only gets triggered once the real share breaks through it.

The formal review, beyond the threshold trigger, follows a fixed calendar: monthly for a company with large, recurring exposure, quarterly for one with smaller or occasional exposure. That calendar moves up whenever an event changes the underlying exposure, a new import or export contract, a client starting to invoice in another currency, or a meaningful shift in the cost structure, rather than waiting for the scheduled date.

These four steps, mapping exposure, calculating the net position, setting the range and defining the rebalancing threshold, turn a decision usually made by instinct into a process that can be explained, audited and repeated every quarter.

What Soulbit delivers today and what stays a company decision

Soulbit's V1 lets a company hold simultaneous balance in dollars, euros and pounds, plus USDC and USDT, with conversion by OTC quote on request and business verification (KYB), giving a company a place to hold the foreign currency share it decides on through the method above. In Colombia, a local banking rail is also available for disbursements in pesos and dollars.

Does Soulbit's dollar balance earn any yield while it is held as a hedge?

Soulbit's balance in dollars, euros, pounds, USDC or USDT earns no yield or interest while it is held. The reason to hold that share is currency hedging, not return, and a company should not expect any yield from holding foreign currency balance on Soulbit.

Soulbit does not calculate a company's net position, does not set its target range and does not define its rebalancing threshold: those three decisions of the method remain the company's and its financial advisor's. Soulbit is also not a bank: the balance is held through third-party omnibus accounts under institutional custody with MPC technology, without deposit insurance coverage or an individual bank account under the company's name. To build the exposure map from Step 1 with real numbers, a company can use a cash flow forecast in foreign currency, and to set the range and the threshold as formal policy, a treasury policy template for SMBs. A company that also invoices in euros or pounds, not only dollars, can review when to hold each balance in multi-currency account for companies.