Reserve Bank makes $21-billion cut to US treasury holdings in March

Central bank does huge OMO silently to control domestic bond yields

The Reserve Bank of India (RBI) reduced its US treasury holdings by $21 billion in March, even as it is silently buying a huge amount of bonds from the secondary market.

The data released by the US Treasury Department shows India held $156.5 billion of US treasury papers in March, down from $177.5 billion in February. In March 2019, India held $152 billion of US treasury assets.

US treasury holdings typically rise and fall with a country’s foreign exchange reserves. By the end of March 2020, India’s foreign exchange reserves were $474.66 billion; in February, they were about $481.54 billion.