RBI trims US bond holdings by $5.6 billion in fiscal first half
06 Dec 2011
India, one of the top 20 investors in US Treasury bonds, has steadily decreased the level of dollar assets in its reserves even as other foreign investors continue to increase their exposure to US treasury bonds.
The Reserve Bank of India (RBI) is estimated to have diluted the US securities portfolio in its foreign reserves by $5.6 billion in the first half of the current financial year (April-September 2011-12), data released by the US Treasury Department showed.
RBI's holding of US Treasuries now stand at around $36.5 billion, which the RBI says, is in tune with its overall reserve management strategy.
At this level, US treasuries account for just over 12 per cent of RBI's overall foreign exchange reserves of around $300 billion.
US treasuries nonetheless rallied after the sovereign downgrade by ratings agency Standards and Poor's.
The rejig of the reserve structure comes at a time when the rupee is at its lowest against the US currency. The rupee, whose value has fallen nearly 13 per cent so far this financial year, is still facing a volatile market.
It is likely that the RBI is looking at better liquidity at a time when the global financial markets are burdened with illiquid sovereign bonds that triggered the euro zone debt crisis.