In contrast, the Reserve Bank of India (RBI) has been steadily increasing its gold reserves—averaging 6.3 tonnes per month in 12 of the past 14 months—bringing total gold reserves to 879 tonnes.
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India is gradually diversifying its foreign exchange reserves, with its holding of US treasury securities coming down and its gold component going up.
As per the latest US Treasury data, India’s holding of treasury securities declined by $10.4 billion to $225.7 billion as of January-end 2025 ($236.1 billion as of January-end 2024).
However, RBI’s purchase of gold went up, averaging 6.3 tonnes every month in 12 of the last 14 months to stand at 879 tonnes at the last count.
In value terms, the holding of gold increased to about 11 per cent of total forex reserves in January 2025 against 8 per cent in January 2024.
Madan Sabnavis, Chief Economist, Bank of Baroda, said: “While I’m not quiet sure if the decline in our US Treasury holding is a result of valuation effect or actual sale which has been undertaken, one thing is certain that there has been re-allocation/ diversification of our forex reserves portfolio.
“So, RBI might have invested proceeds from sale of US Treasury securities in gold or in securities denominated in other currencies including Euro/UK bonds. Our gold holdings have gone up, thereby diversifying the forex reserves portfolio.”
Sabnavis noted that there could be another reason why India’s US Treasury securities holding has gone down — the securities may have matured, but RBI did not make fresh investments in them. The proceeds of the gains may have been deployed in alternative assets, including gold.
As of January 2025, among major foreign holders of US Treasury securities, India ranks 14th. The top five foreign holders of these securities are Japan ($1079.3 billion), China ($760.8 billion), the United Kingdom ($740.2 billion), Luxembourg ($409.9 billion) and the Cayman Islands ($404.5 billion).
Among BRICS countries (Brazil, Russia, India, China and South Africa), India has the second highest forex reserves at $665.4 billion (as of March 2025) after China’s $3498.6 billion (as of February 2025).
Published on April 11, 2025
