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India’s central bank is leaning more on gold than US Treasury bills (USTs) to strengthen its foreign exchange reserves
Gold Vs Sensex Returns.
India’s central bank is increasingly leaning on gold rather than US Treasury bills (USTs) to bolster its foreign exchange reserves, data from the US Department of the Treasury and the Reserve Bank of India (RBI) showed, according to the Economic Times.
India’s investments in US T-bills dropped to $227 billion in June 2025, from $242 billion a year earlier, while its gold holdings rose during the same period. Despite the reduction, New Delhi remains among the top 20 investors in US T-bills, ahead of Saudi Arabia and Germany.
Madan Sabnavis, chief economist at Bank of Baroda, said: “Indian reserves have witnessed a steady buildup of gold, alongside diversification in forex currency assets. This reflects a wider global trend of reducing reliance on the dollar amid trade conflicts and geopolitical tensions.”
Echoing this, Gaura Sengupta, economist at IDFC First Bank, noted: “India’s UST holdings fell by $14.5 billion over one year despite lower yields, showing a deliberate diversification away from USTs. The rise in gold reflects efforts to mitigate revaluation risks tied to US-specific factors such as worsening fiscal metrics and elevated yields.”
India’s UST stock was at its lowest in December, just before Donald Trump assumed office. Nearly all of the $227 billion outstanding is part of the country’s foreign exchange reserves, which stood at $690 billion as of August 22, 2025.
Globally, the reshuffle is evident. China, the third-largest holder after Japan and the UK, cut its UST holdings to $756 billion in June 2025, down from $780 billion a year earlier. In contrast, Israel sharply raised its investments in the asset class during the same period.
Gold Purchases on the Rise
The Reserve Bank of India (RBI) added 39.22 metric tonnes of gold to its reserves over the past year. As of June 27, 2025, India’s gold holdings stood at 879.98 metric tonnes, up from 840.76 metric tonnes a year earlier, according to the report.
India is not the only country recalibrating its reserve mix. China, the world’s third-largest holder of US Treasuries after Japan and the UK, cut its holdings to $756 billion in June 2025 from $780 billion a year earlier. In contrast, Israel increased its exposure to US debt.
Forex Reserves Still Robust
Despite trimming its US bond holdings, India’s overall foreign exchange reserves remain strong at $690 billion as of August 22, 2025. Most of the Treasury holdings are part of this corpus, ensuring that New Delhi continues to maintain a significant dollar buffer even as it steps up its gold accumulation, the report added.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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