India Slashes US Treasury Holdings by 21% in 2025, Signals Major Reserve Diversification

• India's US Treasury holdings dropped by 21% to $190.7 billion by October 2025, the first annual decline in four years.
• The reduction occurred despite appealing US bond yields (4-4.8% for 10-year Treasury), indicating a strategic shift.
• Economists like Dipanwita Mazumdar suggest this reflects India's intent to reduce reliance on dollar-denominated assets.
• A weaker dollar outlook, potential Fed rate cuts, and rising geopolitical risks are driving this diversification.
• India is likely shifting reserves towards gold, non-dollar currencies, and other sovereign bonds, mirroring a global trend among central banks.

Why It Matters: India significantly cut US Treasury holdings, signaling a strategic shift towards diversifying its foreign exchange reserves.