India Reduces U.S. Treasury Holdings 21% in 2025, Diversifying Reserves

India cut its holdings of U.S. Treasury securities by around 21% in 2025, reducing a key slice of its Foreign Exchange Reserves in a move that recent reports framed as strategic diversification rather than financial stress.

Holdings fell to approximately $190.7 billion by october 2025 from $241.4 billion a year earlier, Moneycontrol reported, in what it described as a recalibration of reserve management amid shifting global economic conditions.

Data compiled from U.S. Treasury TIC “Major Foreign Holders of Treasury Securities” (Table 5) put the change at $241.4 billion on October 31, 2024 to $190.7 billion on October 31, 2025, a decline of $50.7 billion (≈21%).

Official comment and interpretation

Dipanwita Mazumdar, Economist at Bank of Baroda, told Moneycontrol the reduction “points to India’s approach towards diversification and marks a shift in its forex strategy.”

Analysts and reporting characterised the drawdown as part of a reserve diversification drive aimed at lowering dollar-concentration risk, rather than a sign of immediate financial distress.

None of the cited reports linked the reduction to weakening bilateral ties between india and the United States; trade, technology cooperation, education exchange, and workforce mobility were reported to remain strong.

Why central banks hold Treasuries and how India manages reserves

U.S. Treasury securities are marketable debt issued by the U.S. Department of the Treasury, including bills, notes, and bonds, and are widely treated by central banks as high-quality, highly liquid reserve assets.

Central banks typically hold Treasuries to preserve capital, ensure liquidity, provide a safe store of value, and anchor confidence in their own currencies.

India’s Treasury investments are overseen by the Reserve Bank of India as part of its management of external reserves, and the RBI’s broader approach to rupee management also surfaced in the context for why reserve composition can change without implying a weakening external buffer.

What India reallocated into

• Gold — reporting highlighted a rising role for gold in India’s reserve mix.
• Other sovereign bonds — reallocations into non-U.S. sovereign debt.
• Non-dollar assets — a broader shift away from dollar-concentrated holdings.

Market participants cited in the coverage said the RBI has been reallocating part of its reserves into these assets as part of diversification and risk management.

Context: yields, geopolitics and global uncertainty

The move came even as the 10-year U.S. Treasury yield traded in the 4.0–4.8% range during the period, a level that can support foreign demand, but reporting said India’s decision suggested risk management and flexibility outweighed yield considerations.

Ongoing geopolitical tensions, trade disruptions, and shifts in U.S. fiscal policy also featured in the reporting as factors prompting central banks globally to reassess risk exposure, alongside broader global economic uncertainty.

Gold and reserve totals

Gold’s rising role in India’s reserve mix emerged as a recurring theme in coverage of the shift in U.S. Treasury securities.

IBEF, summarising RBI weekly data, reported that by the week ended November 14, 2025, India’s total forex reserves reached $692.57 billion, and the gold component jumped by $5.33 billion in a single week to $106.86 billion.

Mazumdar told Moneycontrol that “in the current volatile global political landscape, we may again see higher gold holdings by the RBI,” tying India’s moves to a wider trend of central banks boosting gold reserves.

Recent RBI data cited in reporting showed India’s overall forex reserves remained near record highs after the U.S. Treasury holdings cut, with reserves rising to $696.6 billion on December 26, 2025 and standing at about $686.8 billion in the first week of 2026.

RBI operations and rupee management

Bloomberg reporting on RBI rupee interventions in late 2025 described a “secretive strategy” in which the central bank uses a mix of spot intervention, forwards, and swaps to manage rupee volatility.

Reporting said the RBI sometimes injected the equivalent of $16 billion into markets via bond purchases and FX swaps as part of those operations, illustrating active management rather than passive holding.

Global positioning and market reactions

In global terms, India remains among the top foreign holders of U.S. Treasuries, though it ranks behind countries such as Japan and China, based on U.S. Treasury TIC Table 5.

Coverage in Moneycontrol and CNBC TV18 described India’s shift as consistent with adjustments by several emerging markets, with reserves diversification into gold and non-dollar assets linked to global uncertainty.

The same reporting stressed that portfolio changes in U.S. Treasury securities were being treated as technical reserve management rather than a political signal, with financial decisions framed as strategic rather than symbolic.

Implications for investors and trade

For NRIs and global investors, recent reports characterised the development as largely neutral in the short term, while still relevant as an indicator of how India is positioning its reserve mix.

Businesses engaged in India–U.S. trade were pointed in the coverage toward monitoring currency risk and global rate moves, with the RBI portrayed as actively balancing between dollar assets, gold, and other currencies rather than relying on a single default allocation.

The coverage did not cite any official RBI communication or major analyst commentary suggesting a direct impact on remittances, overseas deposits, or ordinary cross-border transactions from the shift in reserve composition.

Historical context and final framing

The 2025 change amounted to the first annual decline in four years, with India’s Treasury holdings described as broadly stable or rising from 2021–2024 before the move to $190.7 billion on October 31, 2025.

Recent reporting framed the 21% reduction as a calculated diversification step, not a retreat from global markets, with India’s still-high Foreign Exchange Reserves portrayed as supporting stability while allowing strategic flexibility.