Iraq diversifies reserves beyond US treasuries
Shafaq News- Baghdad
Despite the continued dominance of US Treasury securities in global financial markets, Iraq has significantly reduced its holdings over recent years, raising questions about whether Baghdad is moving away from one of the world's most widely used reserve assets or simply adjusting its investment strategy.
US Treasury securities are debt instruments issued by the US government and purchased by countries, central banks, and financial institutions to invest foreign reserves in exchange for relatively stable returns.
Financial experts interviewed by Shafaq News said Iraq's lower holdings of US Treasury securities do not necessarily indicate a shift away from the dollar or a loss of confidence in US assets. According to the experts, Treasury securities remain among the safest and most liquid investment instruments available to governments and central banks due to the size of the US economy and the depth of its financial markets.
They noted that Iraq's holdings approached $45 billion about six years ago before declining as market conditions changed and authorities reassessed the composition of foreign reserves.
The experts attributed the reduction to several factors, including higher US interest rates, changing returns, the need to maintain greater liquidity, and efforts by the Central Bank of Iraq (CBI) to distribute reserves across a broader range of assets.
They also dismissed suggestions that alternatives such as the euro, Chinese yuan, or gold could replace US Treasury securities in the near term, arguing that such assets currently serve diversification purposes rather than acting as substitutes for the dollar-based financial system.
Prime Minister's financial adviser Mudhhir Mohammed Salih said Iraq's reserve policy is based on distributing assets across different instruments and currencies to reduce risk while preserving liquidity and financial stability.
Salih told Shafaq News that reserve portfolios typically include Treasury securities, sovereign deposits, gold, and major foreign currencies, allowing central banks to maintain exchange-rate stability and meet external obligations when necessary.
Treasury International Capital (TIC) data show Iraq has not appeared among the major foreign holders of US Treasury securities since 2023. Before that, Iraqi holdings fluctuated between roughly $23 billion and $39 billion annually. The data also show continued global demand for US government debt. Foreign holdings reached $9.35 trillion by the end of March 2026, up from $9 trillion a year earlier.
Japan remained the largest foreign holder with $1.19 trillion, followed by the United Kingdom with $926.9 billion and China with $652.3 billion.
Among Arab countries, Saudi Arabia and the United Arab Emirates remain among the largest investors in US Treasury securities, relying on the asset as part of broader reserve-management strategies.
