India’s forex reserves rise to $694.23 billion, RBI strengthens gold position amid reduced US T-bill holdings

By: Team India Tracker

India’s investments in U.S. Treasury bills declined to $227 billion in June 2025, down from $242 billion in June 2024, marking a continued trend of reducing exposure.

India’s foreign exchange reserves witnessed a notable increase of $3.51 billion, reaching $694.23 billion in the week ending August 29, 2025, according to the latest data released by the Reserve Bank of India (RBI). This rise comes on the heels of a $4.38 billion decline in the previous week, highlighting the volatility in reserve movements.

Breaking down the composition, foreign currency assets (FCAs), the largest component, expanded by $1.68 billion, bringing the total to $583.93 billion. Gold reserves provided the most significant boost, rising sharply by $1.77 billion to $86.77 billion. Additionally, Special Drawing Rights (SDRs) with the IMF recorded a marginal uptick of $40 million, climbing to $18.78 billion, while India’s reserve position with the IMF rose by $18 million to $4.75 billion.

Source: Reserve Bank of India

The latest data also reflects a strategic rebalancing in India’s reserve composition. Reports indicate that U.S. Treasury bills (T-bills) are gradually losing favour with the RBI, which has instead stepped up gold purchases to diversify and strengthen its holdings. According to figures from the U.S. Treasury and RBI, India’s gold stock within its forex reserves rose to 879.98 metric tonnes as of June 27, 2025, compared to 840.76 tonnes a year earlier.

Meanwhile, India’s investments in U.S. Treasury bills declined to $227 billion in June 2025, down from $242 billion in June 2024, marking a continued trend of reducing exposure. Despite this reduction, India remains among the top 20 global investors in U.S. T-bills, ahead of major economies such as Saudi Arabia and Germany. It is worth noting that India’s U.S. T-bill stock had hit its lowest level in December 2024, just before U.S. President Donald Trump assumed office. As of August 22, 2025, nearly all of the $227 billion in U.S. T-bills continued to form part of India’s foreign exchange reserves, which then stood at $690 billion.

This reallocation strategy, shifting from U.S. debt securities towards gold signals a diversification effort by the RBI, aimed at reducing vulnerability to global market uncertainties while ensuring long-term reserve stability.

Foreign currency maintained by a country's central bank is known as its Forex reserves. It offers protection from unforeseen external shocks. Typically, reserve currencies like the dollar are used to maintain it. The fundamental goal of holding foreign exchange reserves is to preserve confidence in the monetary and exchange rate management policies as well as to preserve currency liquidity to absorb external shocks. Also, having sufficient reserves helps reassure investors in times of extreme uncertainty, such as wars or unrest, portrays a positive image, and reassures trading countries.