The Reserve Bank of India (RBI) has cut its holding of US Treasury Securities by $14.5 billion in the last one year even as it stocked up on gold in the backdrop of rising US Treasury yields, geopolitical and US tariff-related uncertainties.
The Central bank’s holding of US Treasury Securities declined from $241.9 billion as at June-end 2024, to $227.4 billion as at June-end 2025, according to latest US Department of Treasury data.
The RBI’s gold holding rose to 879.59 metric tonnes as at March-end 2025, up 57.49 tonnes from 822.10 metric tonnes as at March-end 2024, per the latest Central bank data.
During the aforementioned period, the proportion of gold reserves in the foreign exchange reserves increased to 12 per cent from 8 per cent.
Dollar volatility
Shrisha Acharya, Vice President, Anand Rathi Global Finance, observed that the RBI has strategically cut its US Treasury holdings by about $15 billion, while simultaneously increasing its gold reserves by nearly $24 billion.
“Despite this shift, India’s total foreign exchange reserves remain robust at $690.7 billion. This realignment reflects a broader global trend of Central bank de-dollarisation, driven by geopolitical uncertainties, with gold increasingly preferred as a safe hedge against US debt risks, currency volatility, and inflation pressures,” he said.
Acharya noted that the recent US tariff actions have further heightened the risk of dollar volatility, strengthening the case for diversification of the forex reserves.
“For India, the move enhances financial resilience by reducing reliance on dollar-denominated assets, strengthening rupee stability, and shielding the economy from imported inflation — though it carries the trade-off of lower returns compared to US Treasury yields,” he said.