Gold rush: India’s holdings of US Treasuries fall to near 6-year low; points to shift in RBI strategy
As the Reserve Bank of India (RBI) continues its forex diversification strategy, India’s holdings of US Treasury securities are down to almost a six year low. As per US Federal Reserve data, India’s exposure to US Treasuries has dropped to $181 billion in April this year. The reduction in US government debt holdings has partly been offset by a rise in gold reserves. This shift highlights India’s ongoing strategy of diversifying its foreign asset portfolio.
Moving away from US Treasuries
India’s investment in US Treasuries has fallen sharply from $232 billion a year earlier, indicating a sustained reduction in RBI’s exposure to US sovereign debt.The trend suggests a change in the RBI’s approach to managing the country’s foreign exchange reserves, with the central bank gradually lowering its allocation to US Treasury securities while increasing its investment in gold. According to an ET report, the last time India’s holdings were below the current level was in May 2020, when they stood at $169 billion.Over the past year, the RBI’s gold reserves have increased to 881 metric tonnes from 879 metric tonnes in April 2025. Six years ago, India’s gold holdings stood at 658 metric tonnes. According to RBI data, the value of the country’s gold reserves has now reached $102.5 billion.Also Read | Trump’s ceasefire ‘over’ remarks & fresh Strait of Hormuz disruptions: What it means for India“We have seen foreign currency assets (FCA) decrease over the past one year, so natural holdings of US T-bills, which are a part of FCA, have decreased,” Madan Sabnavis, chief economist at Bank of Baroda told ET.Sabnavis, however, emphasised gold’s strategic importance, noting that it “does not belong to any particular country”.“Gold will never be sold in a routine scenario like controlling the volatility of rupee, it only adds numerical value to our reserves. However, in extreme situations, such as severe financial sanctions or a loss of access to foreign currency assets, gold can be monetised or pledged,” he said.The strategic importance of gold came into sharper focus in 2022 after Western sanctions led to the freezing of a substantial portion of Russia’s foreign exchange reserves. The episode underscored gold’s value as a reserve asset that is free from counterparty risk and remains available even during periods of heightened geopolitical uncertainty.The Reserve Bank of India is not the only central bank increasing its gold holdings. Monetary authorities across the world have also continued to build their gold reserves. According to data from the World Gold Council, the central banks of Poland, China, the Czech Republic and Turkey remained net buyers of gold in April.By contrast, countries including Japan, the United Kingdom, Belgium, France and Canada increased their holdings of US Treasury securities through net purchases.
