India reduced investment in US Treasuries by over 18% in 2025, Pg12

Key Highlights:

• India reduced its holdings of US Treasuries by 18.96% in 2025, from $225.7 billion in January to $182.9 billion by December 31.
• This reduction of $42.8 billion could cover India's net government borrowing of Rs 11.73 lakh crore proposed in the Union Budget for 2026-27.
• As of February 13, 2026, India's forex reserves increased by $90 billion year-on-year to $725.72 billion, with gold reserves rising by $54 billion to $128.46 billion.
• Other nations, including China, also decreased their US Treasury holdings, while Japan and the UK increased theirs.

Detailed Insights:

• The reduction in US Treasury holdings signals a shift in India's foreign exchange reserve strategy amid trade tensions with the US.
• The RBI aims to balance liquidity, security, and returns by diversifying investments across sovereign debt, supranational bonds, deposits, and gold.
• Concerns arose after the US blocked Russia's access to foreign reserves, raising the possibility of similar actions against other countries.
• US Treasuries are considered safe investments, backed by the US government, and are used as a benchmark for other interest rates.
• As of September 2025, India's foreign currency assets included $489.54 billion in securities, $46.11 billion in deposits with central banks and the BIS, and $43.53 billion in deposits with commercial banks overseas.

Key Concepts Involved:

• US Treasuries: Debt securities issued by the US Department of the Treasury to finance government spending.
• Foreign Exchange Reserves: Assets held by a central bank in foreign currencies, used to back liabilities and influence monetary policy.
• RBI (Reserve Bank of India): India's central bank, responsible for managing the country's monetary policy and foreign exchange reserves.