RBI's Gold Holdings Jump $1.6 Billion, Lifting Forex Reserves
The Reserve Bank of India reported a modest increase in the country's foreign exchange reserves for the week ending January 9. The total kitty grew by $392 million, reaching $687.2 billion. This uptick partially reversed the substantial $9.8 billion decline recorded in the previous week.
A Tale of Two Components: Gold Up, Currency Assets Down
The headline number masks a significant internal shift. The value of the RBI's gold reserves surged dramatically by $1.6 billion, landing at $112.8 billion. This powerful gain single-handedly lifted the overall reserves.
However, it was not all positive news. Foreign currency assets, which form the largest block of the reserves, moved in the opposite direction. They fell by $1.1 billion to $550.8 billion. Bankers attributed this decline primarily to valuation effects from fluctuations in major global currencies like the euro, the British pound, and the Japanese yen.
The Broader Strategic Shift Toward Gold
Looking beyond the weekly data reveals a profound, long-term change in the RBI's reserve composition. The share of gold within India's total forex reserves has staged a remarkable comeback. From a low of around 2.8% in 2007, gold's proportion has rebounded sharply to reach 16.2% by January 2026. This represents the highest level in over two decades.
While rising international gold prices have contributed, the real driver has been a massive increase in physical holdings. The RBI's gold tonnage has climbed steadily from approximately 357 tonnes in the early 2000s to about 880 tonnes by late 2025. Purchases accelerated notably through the 2025 financial year.
The recent weekly increase itself is largely seen as a direct result of higher global gold prices. International markets witnessed a price rise of about 2.5% over the past week and roughly 5.5% over the last month.
Diversifying Away from the Dollar
Analysts interpret this strategic accumulation of gold as a clear move by the RBI to diversify its holdings. The central bank appears intent on reducing its heavy concentration in US dollar-denominated assets. Gold offers a unique, counterparty-free hedge and provides greater custody security.
It is crucial to note that foreign currency assets still dominate the reserve portfolio. The growing gold slice has widened the overall base, not replaced the dollar holdings. This signals the creation of a sturdier and more balanced reserve stack for the nation.
Implications for US Treasury Holdings
The reduction in foreign currency assets has a direct correlation with India's holdings of US government debt. Data released by the US Treasury Department indicates that India's stockpile of US Treasuries has now fallen below the $200 billion mark.
Banking sources suggest the RBI has been actively selling down its liquid US Treasury holdings. The proceeds from these sales are reportedly being used to finance the central bank's interventions in the foreign exchange market. These interventions aim to support the Indian rupee, which has faced pressure following the announcement of additional tariffs on imports from India.
India's Position on the Global Stage
India consistently ranks as the world's fourth-largest holder of foreign exchange reserves, trailing only China, Japan, and Switzerland. However, its position regarding US debt tells a different story. In the league of holders of US Treasuries, India now occupies the sixth spot. It sits behind Japan, the United Kingdom, China, Belgium, and Canada.
The latest data underscores the RBI's active and evolving approach to managing the country's vast financial buffers, with gold playing an increasingly prominent role in its strategy.
