Why Trump's tariffs may accelerate the trend of the RBI cutting its holdings in US Treasury assets

Over the past year, India has reduced its exposure to US Treasury Bills (T-bills), indicating a cautious move in the Reserve Bank of India's (RBI) foreign exchange reserve policy ahead of US President Donald Trump's decision to impose a 50% tariff on Indian imports. As the trade-off is discussed in policy circles, a number of factors may come into play, but this pattern may become more noticeable in the future.Data from the US Department of Treasury shows that by September 2024, India's holdings of US securities had reached a peak of $247.2 billion, but by December 2024, they had steadily decreased to roughly $219.1 billion. As of June 2025, India, the tenth-largest T-bill investor, has around $227 billion in US Treasury securities, up from $242 billion in June 2024. The roughly $20 billion drop since September of last year is the result of a gradual cutover that took place over a number of months.

The Indian Express Your monthly allotment of free stories has been used up. Sign up to read more stories. Register Have an account already? Log inAccording to analysts, under extraordinary circumstances—usually prompted by geopolitical or national security concerns—the US may freeze or restrict access to Treasury securities. Washington and its allies prevented Moscow from accessing a sizable portion of its foreign reserves stored abroad, including assets denominated in dollars and euros, when Russia invaded Ukraine. The episode made clear that the US can, under certain conditions, effectively deny a nation access to its Treasury holdings via the US financial system. A conceivable possibility, but an uncommon occurrence with limited precedent.A certain amount of moderation is seen in the RBI's own data. Overall foreign currency assets decreased to $567.55 billion in March 2025 as a result of India's holdings of global securities and T-bills, which dropped from $515.24 billion in September 2024 to $485.35 billion in March 2025. As of August 2025, the RBI has not yet released any data.