India's holdings of US government securities reached a record high of $241.9 billion in June, according to the latest data released by the US Treasury Department. This represents a significant increase from the $235.4 billion recorded in June 2023.
India's exposure to US Treasuries has been on an upward trajectory in recent months, with holdings reaching $237.8 billion in May 2024, up from $233.5 billion in April and $240.6 billion in March.
While India's holdings have reached a record high, the country still ranks 12th among the largest holders of US government securities. Japan tops the list with over $1.11 trillion in holdings, followed by China with $780.2 billion. The United Kingdom holds the third position with $741.5 billion, while Luxembourg sits in fourth place with $384.2 billion.
Other prominent holders of US government securities include Canada ($374.8 billion), Cayman Islands ($319.4 billion), Belgium ($318 billion), Ireland ($308 billion), France ($307.2 billion), Switzerland ($287.1 billion) and Taiwan ($265.9 billion).
The rise in India's holdings of US Treasuries comes amidst a period of global economic uncertainty, characterised by high inflation, geopolitical tensions, and uneven growth patterns. While the US economy experienced a 2.8% annual growth rate in the June quarter, surpassing the 1.4% growth in the first three months of 2024, the International Monetary Fund (IMF) has described the global economy as being in a "sticky spot". The IMF projected a growth of 3.2% for the current year in its World Economic Outlook Update released in July.
India's increased investment in US Treasuries suggests a preference for a safe-haven asset during a period of global economic uncertainty. The move also highlights the importance of the US dollar as a reserve currency in the global financial system. However, the long-term implications of this trend on both the Indian and US economies remain to be seen.