India’s Holdings in U.S. Treasuries See 21% Decline
In 2025, India’s holdings in U.S. Treasuries fell by 21%, marking the first decline in four years. The Reserve Bank of India (RBI) reduced exposure from $241.4 billion in 2024 to $190.7 billion in 2025, signaling a strategic shift in foreign exchange reserve management.
Why India’s Holdings in U.S. Treasuries Declined in 2025
The 21% decline in India’s U.S. Treasuries holdings was driven by several factors:
- Reserve Diversification: RBI increased allocations to gold and non‑dollar assets.
- Geopolitical Risks: Rising global tensions and sanctions prompted hedging against dollar volatility.
- Bond Yield Dynamics: Despite yields rising to 4–4.8%, RBI prioritized stability over short‑term returns.
- Dollar Outlook: Expectations of a weaker dollar reduced the appeal of long‑duration Treasuries.
India’s Holdings in U.S. Treasuries and Forex Strategy
The first drop in four years reflects a broader strategy:
- Strengthening Gold Reserves: India boosted gold holdings, aligning with global central bank trends.
- Diversification into Other Sovereign Bonds: Investments spread across European and Asian debt markets.
- Reduced Dollar Dependence: A hedge against U.S. fiscal and monetary risks.
Global Reserves Diversification Trend
India’s 21% decline in U.S. Treasuries is part of a global reserves diversification movement:
- Emerging Economies Shift: Countries are reducing reliance on U.S. debt.
- Dollar Dominance Challenged: Lower demand for Treasuries questions the dollar’s supremacy.
- Alternative Assets Rise: Gold, commodities, and non‑dollar bonds gain traction.
Comparative Analysis: India’s U.S. Treasury Holdings
| Year | India’s U.S. Treasury Holdings (USD Billion) | Change |
|---|---|---|
| 2024 | 241.4 | — |
| 2025 | 190.7 | ‑21% |
This table highlights the first decline in four years and the scale of India’s strategic adjustment.
Risks of Reducing U.S. Treasury Holdings
While diversification strengthens resilience, risks remain:
- Liquidity Trade‑off: Treasuries offer unmatched liquidity compared to gold or other bonds.
- Market Volatility: Commodities expose reserves to price swings.
- Currency Shifts: Reduced dollar reliance could destabilize forex markets.
India’s Holdings in U.S. Treasuries: Strategic Lessons
The 21% decline in 2025 offers key lessons:
- Balance Between Safety and Returns: Treasuries provide yield, but diversification ensures stability.
- Global Positioning: India is aligning with emerging economies that prioritize resilience.
- Long‑Term Strategy: Building reserves in gold and alternative assets strengthens India’s financial independence.
Conclusion: India’s 21% Decline in U.S. Treasuries in 2025
The first drop in four years—a 21% decline in India’s holdings of U.S. Treasuries in 2025—marks a turning point in reserve management. By reducing reliance on U.S. debt and diversifying into gold and alternative assets, India is reshaping its forex strategy to withstand global uncertainties.
This move reflects not only India’s priorities but also a broader global reserves diversification trend that challenges the dollar’s dominance and strengthens the role of commodities and regional bonds in the international financial system.