India Moves Away from U.S. Treasury Bonds to Protect Rupee

PuzzledScholar · 2026-02-10T02:03:49+00:00

India's central bank has significantly revamped its reserve strategy, focusing on strengthening the rupee amid declining investment flows. In 2023, $174 billion was withdrawn from US Treasury bonds, marking a 26% decrease from two years prior. This move aligns with BRICS nations' efforts to reduce dependence on the dollar and increase gold liquidity, aiming for greater independence in the global currency system.

PuzzledScholar

2026-02-10 02:03:49

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India’s central bank has fundamentally restructured its reserve strategy in recent years. This process has placed particular emphasis on strengthening the rupee. The change in investment flows that occurred last year is one of the clearest indicators of this strategy.

Significant Decline in Capital Flows and New Directions

In 2023, India withdrew $174 billion from U.S. government bonds. This amount represents a 26 percent decrease compared to the peak two years ago and marks the lowest level in a five-year period. The central bank’s decision is not coincidental — it aims to respond to pressure on the rupee’s value.

According to data from NS3.AI analysts, the large-scale reduction of dollar assets is directly supporting the local currency and is part of a process that directs investments into gold and other commodity reserves. This change is not just an internal matter of the Indian economy.

The BRICS Countries’ Common Direction

This move by India indicates a broader trend within the BRICS official group. Other member countries are also working to increase gold and commodity liquidity to reduce dependence on the U.S. dollar. The strategic goal of this direction is to achieve independence within the global currency system.

The central bank’s reserve liberalization policy is viewed as a component of the long-term strengthening strategy for the rupee. Especially, such precise measures are crucial for eliminating weak currency baselines.

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