BRICS member India dumped $174 billion worth of US dollar bonds in a historic push to support the falling rupee. The US Treasury bonds are down 26% from their peak in 2023. According to the data from the Reserve Bank of India (RBI), the bonds have fallen to their five-year low.

The US Treasury bonds now account for one-third of BRICS member India’s forex assets, and are down 40% compared to last year. India is offloading US bonds to buy and accumulate gold in its reserves instead. It is joining the shift where emerging economies are diversifying their central bank reserves by moving away from US dollar-denominated assets.

India is aiming to provide support for the falling rupee vs the US dollar by offloading the US Treasury bonds. The global bond market is experiencing a paradigm shift and is giving way to gold and other commodities, including local currencies. BRICS is the center of it all, as India, Russia, and China have been routinely dumping US bonds and Treasuries.

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BRICS: India Could Further Offload US Bonds, Ramp Up Gold Buying

Win Thin, Chief Economist at the Bank of Nassau, stressed that BRICS member India could further sell US bonds. “There is still room for India to lighten up its US Treasury holdings,” he said. Even Finance Minister Nirmala Sitharaman hailed the RBI’s move as a “very considered decision” to diversify its reserves.

Gold is now competing with US Treasury bonds as India and other BRICS members have been accumulating it since 2022. “The trend is very much embedded at this point,” said Michael Brown, Senior Research Strategist at Pepperstone in London. The strategist added that even if the US and India trade deal goes through, the RBI will continue offloading Treasuries. A trade agreement “will simply see holdings stabilize, rather than India go on some sort of mass buying spree,” he said.