After marginally rising to USD 157.4 billion in April, the holdings jumped to USD 169.9 billion in May, an increase of around USD 13 billion in a month’s time.
In March, the exposure had come down steeply to USD 156.5 billion from the record-high in February, according to data from the US Treasury Department.
The country was the 12th largest holder of the American government securities while Japan had the maximum exposure at USD 1.260 trillion at the end of May. At the second spot was China with holdings worth USD 1.083 trillion, followed by the United Kingdom at the third place with an exposure of USD 393.5 billion.
As per the data, Ireland is at the fourth position, followed by Brazil, Luxembourg, Hong Kong, Switzerland, Cayman Islands, Belgium and Taiwan.
Dollars and other US government assets began to be among the preferred ones for investments, with the collapse of the gold standard or the Bretton Woods principles in the late 1970s and central banks moved to the fractional reserves system.
The US dollar/T-bills have been the safest asset class for any central bank, despite getting one of the lowest returns. Central banks, including the RBI, follow the principle of SLR (Safety, Liquidity and Return) for their investment decisions.
India’s foreign exchange reserves rose by USD 1.275 billion to a life-time high of USD 517.637 billion in the week to July 17.