Table of Contents
- India’s holdings of American government securities increased by nearly USD 13 billion to USD 169.9 billion at the end of May.
- It was USD 4 billion in April.
Where are India’s forex reserves kept?
- As much as 64% of the foreign currency reserves are held in securities like Treasury bills of foreign countries, mainly the US.
- 28% is deposited in foreign central banks and 7.4% is also deposited in commercial banks abroad, according to the RBI data.
- India also held 01 tonnes of gold as of March 2020, with 360.71 tonnes being held overseas in safe custody with the Bank of England and the Bank for International Settlements.
- While the remaining gold is held domestically.
- India’s holdings of American government securities increased by nearly USD 13 billion to USD 169.9 billion at the end of May.
- It was USD 4 billion in April.
- Touched a record high of USD5 billion in February.
Ranking
- India was the 12th largest holder of the American government securities.
- Japan had the maximum exposure at USD 1.260 trillion at the end of May.
- At the second spot was China with holdings worth USD 083 trillion, followed by the United Kingdom at the third place with an exposure of USD 393.5 billion.
Why most countries choose US govt securities?
- The US dollar/T-bills have been the safest asset class for any central bank, despite getting one of the lowest returns.
- Central banks, including the RBI, follow the principle of SLR (Safety, Liquidity and Return) for their investment decisions.
- Dollars and other US government assets began to be among the preferred ones for investments,
- With the collapse of the gold standard or the Bretton Woods principles in the late 1970s.
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