On April 26, 2020 According to the latest data from the United States (US) Treasury Department (dep) the India’s holding of US government (govt) securities has gone up by over USD 13 billion (bn) in a month to a record high of USD 177.5 bn at the end of February, since November 2019, the country has slowly climbed to USD 159.2 bn.
Major Highlights
i.In the last one year since February 2019, the overall holding of India has jumped by a staggering USD 33.2 bn .
ii.India held US government bonds worth USD 164.3 bn at the end of January, the highest level ever & in December the same stood at USD 162 bn . The Reserve Bank of India(RBI) buys these bonds.
Foreign holdings data on the basis of country wise as per Treasury dept
- India is positioned at 13th position & the 1st position is held by Japan with securities worth over USD 1.268 trillion(tn) at February end, followed by China with holdings of USD 1.092 tn & United Kingdom at USD 403.2 bn .
- Brazil is positioned in 4th with USD 285.9 bn, followed by Ireland- USD 282.7 bn, Luxembourg- USD 260.8 bn, Hong Kong USD 249.8 bn, Switzerland- USD 243.7 bn, Cayman Islands- USD 219.4 bn, Belgium- USD 218 bn, Taiwan- USD 201.9 bn and Saudi Arabia- USD 184.4 bn
Key Points
i.With the collapse of the gold standard or the Bretton Woods principles in the late 1970s & central banks moved to the fractional reserves system, the US dollar/T-bills is preferred & the safest asset class for any central bank, despite getting one of the lowest returns.
ii.Central banks, including the RBI, follow the principle of SLR (Safety, Liquidity and Return) in order for their investment decisions.
iii.India’s foreign exchange reserves climbed by USD 3.09 bn to USD 479.57 bn in the week ended April 17.
About US Department of the Treasury:
Secretary– Steven Terner Mnuchin
Deputy Secretary– Justin Muzinich
