India opts for golden hedge, cuts treasury-bill share in forex kitty
Mumbai: India’s central bank has preferred to increase its gold holdings over US Treasury bills to bolster foreign exchange reserves, showed the latest US Department of Treasury and Reserve Bank of India (RBI) data, reflecting a broader worldwide trend to diversify national savings beyond the greenback.India’s investments in US T-bills fell in June compared with ayear ago while its gold holdings rose during the same period.Still, New Delhi remains among the top 20 investors in US T-bills, ahead of Saudi Arabia and Germany. Its holdings stood at $227 billion in June 2025, albeit lower than $242 billion in June last year.The reduction in the dollar's share reflects a broader global diversification trend in foreign exchange reserves amid geopolitical tensions and trade conflicts. “Indian reserves have witnessed progressively a higher buildup of gold reserves which has been accompanied by diversification in forex currency assets,” said Madan Sabnavis, chief economist at Bank of Baroda."This is why some countries, especially India, China, and Brazil, have seen swings here. The outstanding stock of T-bills reflects dollar valuation amid volatility in the greenback witnessed in the last twelve months."RBI data shows that it purchased approximately 39.22 metric tonnes of gold during the same period.Gold as part of foreign exchange reserves stood at 879.98 metric tonnes as of June 27, 2025, compared with 840.76 metric tonnes on June 28, last year. 
'Derisking Cash Stash'"India's holdings of UST reduced by $14.5 billion over one year, despite a decline in UST yields, indicating that there has been a diversification of forex reserve holdings away from UST," said Gaura Sengupta, economist at IDFC First Bank."Over the same period, there has been a rise in gold reserve holdings. This shift reflects an effort to diversify forex reserves and reduce the risk of revaluation loss due to U.S.-specific factors. For instance, worsening fiscal metrics of the U.S. government have kept yields elevated."India's stock of U.S. T-bills was at its lowest in December, ahead of Donald Trump taking office. Nearly all of the $227 billion in outstanding T-bills are part of the foreign exchange reserves, which stood at $690 billion as of August 22, 2025.China, the third-largest holder of U.S. T-bills after Japan and the UK, also reduced its holdings. Mainland China held $756 billion in June 2025, down from $780 billion in June 2024.By contrast, Israel sharply increased its investments in this asset class over the same period.
'Derisking Cash Stash'"India's holdings of UST reduced by $14.5 billion over one year, despite a decline in UST yields, indicating that there has been a diversification of forex reserve holdings away from UST," said Gaura Sengupta, economist at IDFC First Bank."Over the same period, there has been a rise in gold reserve holdings. This shift reflects an effort to diversify forex reserves and reduce the risk of revaluation loss due to U.S.-specific factors. For instance, worsening fiscal metrics of the U.S. government have kept yields elevated."India's stock of U.S. T-bills was at its lowest in December, ahead of Donald Trump taking office. Nearly all of the $227 billion in outstanding T-bills are part of the foreign exchange reserves, which stood at $690 billion as of August 22, 2025.China, the third-largest holder of U.S. T-bills after Japan and the UK, also reduced its holdings. Mainland China held $756 billion in June 2025, down from $780 billion in June 2024.By contrast, Israel sharply increased its investments in this asset class over the same period.Add 
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