Iraq boosts financial stability with huge dollar and gold reserves in US, Europe

Iraq boosts financial stability with huge dollar and gold reserves in US, Europe

2025-01-27 01:04

Shafaq News/ A country that has huge reserves of hard currency is considered an economically stable country that can intervene at any time to address imbalances in the balance of payments structure. It also provides an important element in establishing the country’s creditworthiness, enhances the country’s credit rating in international transactions, and provides cover for its local currency.

The country that has reserves takes into account their diversification (securities, deposits, gold and bonds…) in addition to geographical distribution to reduce exposure to risks and provide returns that ensure the sustainability of these reserves.

Diversified financial assets

In this regard, the Prime Minister’s Advisor, Mazhar Mohammed Salih, explained to Shafak News Agency, “Countries seek to diversify their reserves to include different currencies and various financial assets to achieve greater stability, and the US dollar is the main reserve in the reserves of these countries, because it is the most accepted and used global currency in international transactions and the most flexible.”

He added, “Most countries prefer to hold assets that provide them with a fixed and stable income, such as US or European treasury bonds that can generate annual interest, while gold does not generate fixed returns like government bonds.”

Saleh pointed out that “it is difficult to deal with gold in times of crisis, as it is difficult to convert gold into liquidity quickly compared to other financial assets such as foreign currencies and bonds.”

The foreign exchange reserve is the country’s reserve of foreign currencies, and is called the foreign exchange reserve. The purpose of the reserve is to protect itself and maneuver with it in times of economic recession or war.

The Central Bank of Iraq announced in 2024 that Iraq has a foreign currency reserve exceeding $100 billion.

Bond investment

For his part, the economic expert and professor of economics at the University of Iraq, Abdul Rahman Al-Mashhadani, stated that “the existing reserves of hard currencies are the reserves of countries, not governments,” indicating that “Iraq possesses a group of them amounting to approximately 106 billion dollars, of which 16 billion dollars is the value of gold in these reserves, and the rest is foreign currencies.”

Al-Mashhadani explained, during his talk to the agency, that “gold as a reserve cannot be invested except by buying and selling. Iraq sells when the price of gold rises and buys when the price falls, and thus achieves profits in this field,” adding, “Its storage in international banks is subject to fees.”

He pointed out that “the currency reserve is divided into more than one section, some of which are invested in US Treasury bonds in the range of 31 to 34 billion dollars, and the rest are used for debts,” noting that “Iraq does not have sovereign funds like Saudi Arabia and others for surplus currencies, which are invested in various fields.”

Iraq has 152.6 tons of gold reserves, which makes it 29th in the world out of 100 countries listed in the reserves table, and third in the Arab world after Saudi Arabia and Lebanon.

Foreign investment

In contrast, the financial expert and former general manager of the Central Bank, Mahmoud Dagher, pointed out that “Iraq has more than 100 billion dollars distributed among the world’s banks and central banks, especially the US Federal Reserve, the European Bank, the Bank of England in Britain, the Basel Bank in Switzerland, the Emirates, and Saudi Arabia.”

Dagher told Shafaq News Agency, “These reserves contain foreign currencies, bonds, and gold, and are managed by the Central Bank and achieve good financial returns. This is what is called foreign investment.”

Coin cover

In addition, Jamal Kojer, a member of the Parliamentary Finance Committee, told the agency, “Iraq’s large reserves of hard currency, including gold, provide cover for the local currency and give it stability.”

Koger added, “Many bet on the fall and demise of the currency, and therefore these reserves make the central bank intervene in the event of any imbalance facing financial policy.”

Variable reserves

But the economic expert, Hilal Al-Taan, saw that “all countries of the world boast about the amount of hard currency they have as a reserve, and this currency consists of the currencies of countries such as the dollar, the euro, and the franc, as well as gold.”

Al-Taan concluded, during his interview with Shafaq News Agency, that “Iraq is among the countries that were able, after 2003, to increase their currency balance to more than 110 billion dollars, and also to increase their gold balance to more than 150 tons.”

He concluded his speech by saying, “These reserves are constantly changing in terms of the returns that Iraq obtains, through investing these currencies as interest in banks and as bonds.”

shafaq.com