The Reserve Bank of India (RBI) has reduced its purchases of US Treasuries by over $8 billion in 2025. According to Bloomberg’s analysis of the US Treasury Department, India has reduced its US Treasury holdings from $235.3 billion to $227.4 billion from May to June. That’s a reduction of over $7.9 billion, as relations with the US deteriorate over Trump’s tariffs and trade wars.
India is doubling down on gold instead and has increased procurement of the precious metal. The Modi administration has ramped up the purchase of gold since 2022 after the White House imposed sanctions on Russia. The RBI is diversifying the nation’s reserves by cutting down on US dollar-denominated debt via Treasuries and bonds.
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The latest data from the RBI shows that India purchased 38.5 metric tons of gold in July. The country’s gold holdings touched 880 metric tons and continue to pile up. All of these investments went to US Treasuries and bonds, previously making it cut ties with dollar-denominated debt.
US Treasuries Face Litmus Test From India and Other Developing Countries
Not just India, several developing nations are cutting down on US Treasuries and diversifying their reserves with gold. The development stemmed after the White House imposed sanctions on Russia in 2022 for invading Ukraine. “There is a sense that if the US can shut Russia off from its assets, that can be repeated with any country. Any central bank will want to diversify,” said Gaurav Kapur, Chief Economist at IndusInd Bank, to the Financial Express.
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The US will face a deficit if many more countries like India reduce their holdings of Treasuries and bonds. Last week, India’s Finance Minister Nirmala Sitharaman said that the RBI was acting on a “very considered decision” to diversify the country’s reserves, which is the fourth-largest in the world, valued at $694 billion.