India has trimmed its holdings of US Treasury bills to $227 billion as of June 2025, down from $242 billion a year earlier, according to recent data from the Reserve Bank of India (RBI) and the US Treasury Department. This $15 billion reduction signals a notable shift in how India manages its foreign exchange reserves.
In place of dollar assets, India is ramping up its gold holdings. The RBI added 39.22 metric tonnes of gold over the year, bringing its total gold reserves to 879.98 tonnes by late June 2025—up from 840.76 tonnes previously
Despite scaling back its investment in US Treasuries, India continues to maintain a strong reserve base. As of August 22, 2025, its total foreign exchange reserves stood at a robust $690 billion, with Treasury securities still forming a significant component
This move mirrors a growing global trend of reserve diversification, seen not just in India but also in other major economies like China. Analysts note that increasing gold holdings provides a buffer against volatility in the US dollar and geopolitical instability.
Why It Matters
- Strategic Diversification: Reducing exposure to US debt and increasing gold holdings helps hedge against currency risks and external shocks.
- Enhanced Financial Stability: Gold serves as a reliable, non-yielding asset—offering long-term value preservation during economic uncertainty.
- Global Trend Alignment: India joins other international players diversifying away from dollar-heavy portfolios, highlighting rising caution over reliance on US assets.
- Strong Reserve Base: A total of $690 billion in forex reserves provides India with ample liquidity and economic strength amidst changing global financial dynamics.
