India Reduces US Treasury Holdings by 21% in 2025 Amid Global Uncertainty

India has significantly lowered its exposure to US Treasury securities by 21% between October 2024 and October 2025, reflecting a broader initiative to diversify foreign exchange reserves amid heightened global economic and geopolitical risks. This marks the first decline in US Treasury holdings by India in 4 years. 

India's Strategic Reduction in US Dollar Exposure 

As per data, India’s US Treasury holdings declined from $241.4 billion on October 31, 2024, to $190.7 billion by October 31, 2025. Despite yields on 10-year US Treasuries remaining within a relatively attractive 4.0% to 4.8% range during this period, the Reserve Bank of India appears to have shifted focus from returns to risk management and diversification. 

This decrease comes amidst a weakening US dollar, which has seen softening due to signs of slowing labour markets and anticipation surrounding the US Federal Reserve entering a potential easing phase. These trends may have influenced India’s decision to reduce its holdings in dollar-denominated long-term assets. 

Reserve Diversification Towards Gold and Non-Dollar Assets 

Amid evolving global conditions, India has redirected a portion of its reserves into alternative assets such as gold and non-dollar currencies. This realignment supports reduced reliance on the US dollar while providing a buffer against inflation risk, currency volatility, and geopolitical developments.  

Central banks worldwide, including India's, have increasingly added gold to their portfolios as part of this adjustment strategy. 

Read More: India and Germany Near Landmark $8 Billion Submarine Deal! 

Changing Global Reserve Management Trends 

This move aligns India with broader global patterns among emerging markets aiming for safer and more balanced reserve portfolios. A shift from high US dollar concentration helps mitigate risks associated with any significant market or policy shifts in the United States.  

India’s change in holdings reflects ongoing adaptations in its foreign exchange management strategy, emphasising flexibility and reduced exposure to concentrated risks. 

Conclusion 

India's 21% reduction in US Treasury holdings during FY25 shows a strategic move towards foreign reserve diversification. Despite stable US yields, global uncertainties and dollar fluctuations prompted reallocation to gold and other assets, aligning with emerging market trend shifts. 

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