India Dumps US Treasuries: Holdings Hit 5-Year Low Amid Dollar Diversification Push

• India's US Treasury holdings have fallen to a five-year low of $174 billion, a 26% drop from its 2023 peak.
• The Reserve Bank of India (RBI) is diversifying its foreign exchange reserves, with Treasuries now accounting for one-third, down from 40% a year ago.
• This shift is driven by efforts to support the rupee, mitigate sanctions risks, and follows the freezing of Russia's reserves.
• Other major economies like China and Brazil are also reducing US Treasury holdings and increasing gold reserves.
• The move reflects a broader global trend among central banks to seek alternatives to dollar assets amidst geopolitical tensions and trade threats.

Why It Matters: India is significantly reducing its US Treasury holdings to diversify reserves and strengthen the rupee.