The UAE’s holdings of US$114.8 billion in US government debt as of June 2026 highlight the country’s reliance on liquid dollar-denominated assets. This strategy supports the UAE’s currency, the dirham, which has been pegged to the US dollar since 1997.
According to Nagham Hassan, a market analyst at eToro, the investment in US Treasuries is a strategic move. “The scale of the UAE’s investment in US Treasuries has a clear economic rationale,” Hassan said. “Maintaining that peg requires access to liquid dollar assets that can be sold at short notice when needed.”
A Strategic Reserve Structure
US Treasuries are particularly well suited to this role because they form the world’s largest and most actively traded government bond market. The figures reflect securities attributed to the UAE and do not represent the Central Bank of the UAE’s reserves alone, demonstrating the country’s significant exposure to US government debt.
The structure of the UAE’s holdings helps limit exposure to market fluctuations. Nearly 60% of the portfolio is invested in short-term Treasury bills maturing within one year, while the remaining 40% is held in longer-term securities.
Managing Market Fluctuations
Hassan notes that short-term bills experience relatively limited price movements when yields rise. As these securities mature, the proceeds can be reinvested at higher prevailing rates, translating into stronger potential returns. The longer-term portion, more sensitive to interest rate changes, recorded estimated paper losses of around US$6 billion in 2025.
Despite these fluctuations, reserve assets are generally held for stability and liquidity rather than short-term trading. Holding Treasury securities until maturity ensures repayment of their full face value, regardless of secondary market price changes. This approach benefits residents and businesses by maintaining the dirham’s stability against the dollar, making the cost of dollar-priced imports more predictable and reducing currency uncertainty for foreign investors.
The Dirham’s Stability: A Key Strength
The currency peg provides certainty over the dirham’s value against the dollar, essential for an economy built on trade, investment, and the movement of global capital. Hassan concluded, “The peg cannot eliminate inflation or prevent the dirham from moving against currencies such as the euro or Indian rupee when the dollar fluctuates. What it does provide is certainty over the dirham’s value against the dollar. For an economy built on trade, investment and the movement of global capital, that predictability remains one of the UAE’s most important strengths.”
Amid heightened volatility in global bond markets, the UAE’s strategic holdings in US Treasuries reflect a commitment to economic stability.
