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RBI is reshaping India’s foreign exchange reserves by adding more gold and cutting exposure to US Treasuries — what does this shift mean?
India is cutting its US Treasury holdings while adding more gold to its reserves; RBI data shows the shift is part of a global trend to diversify forex reserves and reduce risks from the dollar
India’s central bank is gradually shifting the composition of its foreign exchange reserves, leaning more on gold and reducing its exposure to US Treasury bills (USTs). Data from the US Department of the Treasury and the Reserve Bank of India (RBI), reported by The Economic Times, shows that while India remains a significant investor in US debt, the pivot toward bullion is becoming clearer.
Why India Is Diversifying?
For years, US Treasuries have been the anchor of India’s reserves, providing both liquidity and safety. But the changing global environment — marked by trade conflicts, geopolitical tensions, and concerns over the US’s rising fiscal deficits — is prompting central banks worldwide to rethink their reliance on the dollar. Gold, traditionally a safe-haven asset, offers stability against these uncertainties.
India’s Reserves Tilt Toward Gold
India’s investments in US Treasury bills fell to $227 billion in June 2025, compared with $242 billion a year earlier. Over the same period, the RBI added 39.22 metric tonnes of gold, taking India’s total holdings to 879.98 tonnes as of June 27, 2025. Despite this reallocation, the overall reserves remain robust at $690 billion as of August 22, 2025, ensuring India still has a significant dollar cushion.
Expert Views on the Shift
Madan Sabnavis, Chief Economist at Bank of Baroda told Economic Times, India’s rising gold reserves reflect a global trend of de-dollarisation. He noted that central banks are diversifying their assets to guard against overdependence on the US dollar.
Gaura Sengupta, Economist at IDFC First Bank, echoed this view, pointing out that India cut its UST holdings by $14.5 billion in one year despite lower yields, indicating a deliberate move away from US debt. She linked this decision to growing risks tied to US fiscal metrics and elevated yields, which make Treasuries less attractive than in the past.
How Other Countries Are Responding
India’s approach is part of a wider reshuffle. China, the world’s third-largest holder of US Treasuries, trimmed its holdings to $756 billion in June 2025, down from $780 billion a year earlier. In contrast, Israel increased its exposure to US debt during the same period. This divergence highlights how central banks are tailoring reserve strategies to their domestic and geopolitical priorities.
What It Means for India
The tilt toward gold marks a step toward reducing dollar dependence, though Treasuries still account for a large share of India’s reserves. Gold provides a hedge against volatility in global markets and reduces exposure to US-specific risks. At the same time, maintaining $227 billion in Treasuries shows that India values the liquidity and stability that dollar assets provide.
India’s reserve mix is evolving, but the shift is measured, not abrupt. The RBI’s growing appetite for gold signals a desire to strike a balance: reducing vulnerability to dollar swings while ensuring the country retains a strong dollar buffer. In a world of shifting geopolitical and financial realities, this strategy reflects a cautious yet forward-looking approach.
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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