The Reserve Bank of India (RBI) has reduced its holdings in US Treasury securities to below US$200 billion, reflecting a strategic shift in managing its foreign exchange reserves. This marks a substantial reduction from over US$240 billion a year earlier and represents the first annual decline in US Treasury exposure in four years.
At the same time, the RBI has increased its gold reserves, with holdings rising to 880.18 metric tonnes by the end of October 2025 — up from 866.8 tonnes a year ago — underscoring a deliberate move toward asset diversification.
Gold now accounts for a larger share of India’s total foreign exchange reserves, rising to approximately 13.6 %, compared with about 9.3 % in the previous year. This shift aligns with a broader global trend among central banks to bolster safe-haven assets amid economic uncertainty and higher bond-yield risks.
Despite trimming US Treasuries, India’s overall forex reserves have remained relatively stable, indicating that the RBI’s rebalancing efforts have not significantly weakened the country’s external buffers.
Analysts say the strategy reflects a desire to reduce valuation risk from rising global bond yields and strengthen reserve resilience by holding a mix of assets, including gold, that can better hedge against volatility.
In the same period, several other central banks — including those of the UK, Belgium, Japan, France, Canada and the UAE — increased their exposure to US Treasuries, highlighting India’s unique approach in the current environment.
Overall, the RBI’s reduction in US Treasury holdings and concurrent increase in gold reserves signal a strategic diversification of India’s forex portfolio, aimed at enhancing financial stability and mitigating risks associated with over-dependence on dollar-denominated assets.
Source: The Economic Times