US Treasury bills seem to be going out of fashion, with the Reserve Bank of India (RBI) increasing gold holdings in order to support the nation's foreign exchange reserves.
US Department of Treasury and RBI data in recent times show that India's central bank is looking more towards gold compared to US Treasury bills, as part of a general global pattern of diversifying reserves away from dollar-based instruments.
As of June 27, 2025, India's foreign exchange reserves in gold stood at 879.98 metric tonnes, from 840.76 metric tonnes as of June 28, 2024.
Figures pointed out by an ET report indicate that India's holdings of US Treasury bills fell during June compared to the same month last year, while gold reserves increased during the same timeframe. This notwithstanding, India is still one of the top 20 holders of US T-bills, preceding nations like Saudi Arabia and Germany. Its position was worth $227 billion as of June 2025, compared to $242 billion in the same month in the previous year.
The declining proportion of dollar-denominated assets reflects a worldwide trend towards diversification of foreign exchange reserves, driven by geopolitical tensions and trade tensions.
"Indian reserves have seen increasingly a greater accumulation of gold reserves which has been paralleled with diversification in forex currency assets," stated Bank of Baroda's chief economist Madan Sabnavis.
"This is why there have been swings in some countries, particularly India, China, and Brazil. The size of the outstanding stock of T-bills is indicative of dollar valuation during volatility in the greenback seen over the past twelve months."
The central bank purchased about 39.22 metric tonnes of gold during this period, as per RBI data.
"India's UST holdings fell by $14.5 billion in one year, even as the UST yields declined, reflecting there has been a diversification of forex reserve holdings away from UST," said Gaura Sengupta, IDFC First Bank economist, according to ET.
"During the same timeframe, reserve holdings of gold have increased. This is an attempt at diversifying forex reserves and curtailing revaluation loss risk through US-specific factors. For example, deteriorating fiscal fundamentals of the US government have sustained yields at elevated levels."
India's holdings of US T-bills fell to their lowest in December before Donald Trump took office. The bulk of the $227 billion in the T-bills is part of the nation's total foreign exchange reserves, which amounted to $690 billion as of August 22, 2025.
Worldwide, China is the third-largest US T-bill holder after Japan and the UK and has also lowered its holdings—from $780 billion in June of 2024 to $756 billion in June of 2025. In contrast, Israel dramatically raised its investments in this category during the same period.
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