Reduction in US Treasuries Purchase by India: From $235.3 billion to $227.4 billion - Examining the Reasons Behind the Decrease

In response to the ongoing geopolitical scenario, the Reserve Bank of India (RBI) has made a strategic decision to increase its gold holdings, a move that comes in the wake of the US freezing Russia's reserves following the invasion of Ukraine.

Last week, India's finance minister announced that the RBI is acting on a "very considered decision" to diversify the country's reserves. This decision is not targeted at the American currency, according to MEA spokesperson Randhir Jaiswal. The RBI's focus, as further clarified by External Affairs Minister Dr S Jaishankar, is more on "derisking" trade by keeping doors to diverse partners open and exploring other payment systems to reduce the sole-dependence on a single currency.

Former RBI deputy governor Michael Patra stated that the increase in gold holdings is part of a strategic decision to reduce the US dollar's influence on India and expand its global reserves. Patra also expressed concerns about central banks' ability to access gold stored overseas in the event of a crisis or in the case of sanctions, freezing, and confiscation.

The BRICS nations, including India, have been positioning themselves as a counter-argument to Western dominance, a move that US President Donald Trump has perceived as a threat to the US dollar. In recent months, India has strengthened strategic partnerships particularly with Russia and China, engaging in initiatives such as joint aircraft production with Russia and strengthening ties within the India-China-Russia strategic triangle, which focuses on defense, energy, and trade cooperation.

Meanwhile, India's reserves, currently the world's fourth-largest, are valued at about $694 billion. The gold holdings of India's central bank, the RBI, increased to 880 metric tons in July, marking a significant surge from 841.5 tons in a previous year. Concurrently, India's purchases of US Treasuries decreased from $235.3 billion in May to $227.4 billion in June.

India is currently grappling with Trump's imposition of 50% tariffs since last month, which the US president has defined as "secondary sanctions" on the country meant to exert additional pressure on Russia to end its war in Ukraine.

Apart from the geopolitical tensions, there have been criticisms regarding the H-1B visa system. An American citizen has criticized the system after an Indian professional was forced to return home, labelling the policy as "nonsensical."

In other news, Lachlan Murdoch, a son of media mogul Rupert Murdoch, was announced as the new leader of the media empire, with the three oldest siblings set to receive $1.1 billion each. Meanwhile, the US CEO Ian Laffey has been criticized for ignoring 10,000 Indian drone startups daily and dropping a "dictator bomb" online.

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Reduction in US Treasuries Purchase by India: From $235.3 billion to $227.4 billion - Examining the Reasons Behind the Decrease