India Cuts US Treasury Holdings To 5‑Year Low Amid Reserve Diversification

India has significantly lowered its holdings of United States Treasury securities, marking a notable shift in the composition of its foreign exchange reserves. The reduction brings India’s exposure to its lowest level in 5 years, as reported through available Treasury data and financial analyses.

This adjustment forms part of a broader Reserve Bank of India strategy to strengthen the rupee and diversify reserves beyond dollar‑denominated instruments. The move also aligns with similar adjustments made by several major economies responding to shifting global financial conditions.

Decline In US Treasury Holdings

India’s exposure to US government bonds declined sharply between October 31, 2024 and October 31, 2025. During this period, India reduced its holdings from approximately $241.4 billion to about $190.7 billion, marking a contraction of nearly 21%.

This represents the first annual decline in 4 years, reflecting a sustained strategic decision rather than a short‑term reaction to interest rate movements. The adjustment also underscores the country’s preference for reshaping its reserve profile under evolving macroeconomic and currency conditions.

Diversification Into Non‑Dollar Assets

A key element of India’s strategy has been increasing allocations to non‑dollar assets within its overall reserves. Reports indicate that India, along with multiple global central banks, has expanded its gold holdings as part of this reallocation.

Gold’s share within India’s total foreign exchange reserves has grown, signalling a shift towards assets perceived as more stable during periods of heightened global uncertainty. The diversification has been achieved without a significant increase in total foreign assets.

Role Of Currency Management and Market Conditions

The reduction in US Treasury holdings comes against the backdrop of efforts to support the Indian rupee in global currency markets. The Reserve Bank of India has been active in managing volatility and smoothing exchange rate pressures, contributing to adjustments in the composition of reserve assets.

Global financial conditions, including changes in yield environments and geopolitical developments, have also influenced this repositioning. This pattern mirrors broader trends among global central banks aiming to reduce concentration risks and rebalance reserve portfolios.

Read More: India Imposes 30% Tariff on US Pulses.

Conclusion

India’s reduction of its US Treasury holdings to a 5‑year low highlights a significant strategic realignment of its foreign reserves. The drop from $241.4 billion to $190.7 billion over the course of a year underscores the scale of the shift.

Increased allocation towards non‑dollar assets, especially gold, reflects a broader diversification approach adopted amidst global uncertainties. The adjustments point to a structural reserve strategy focused on risk distribution and currency stability.

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