India's holding of US govt securities hits record high of $177.5 bn in Feb

India's holding of US government securities has jumped by over $13 billion in a month to record high of $177.5 billion at the end of February.

In the last one year since February 2019, the overall holding of India has jumped by a staggering $33.2 billion, news agency PTI reported.

Latest data from the US Treasury Department showed that the amount of securities owned by India has also gone up by the maximum quantum in a span of one month, amid the country slowly hiking the level since November last year when it stood at $159.2 billion.

Japan was the largest holder with securities worth over $1.268 trillion at February end, followed by China with holdings to tune of $1.092 trillion.

At a distant third place was the United Kingdom, which had securities valued at $403.2 billion, as per the data.

In terms of holdings, India is at the 13th position. It owned American government securities worth $164.3 billion at the end of January, which was also the highest level then, and in December, the same stood at $162 billion.

The Reserve Bank of India buys these bonds.

The Treasury Department releases foreign holdings data on a country-wise basis.

At the fourth place is Brazil ($285.9 billion), followed by Ireland ($282.7 billion), Luxembourg ($260.8 billion), Hong Kong ($249.8 billion), Switzerland ($243.7 billion), Cayman Islands ($219.4 billion), Belgium ($218 billion), Taiwan ($201.9 billion) and Saudi Arabia ($184.4 billion), the data showed.

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.

Since then, 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. Like its counterparts in other countries, the RBI follows the safety first, liquidity second approach and return on investment as the third criteria.

India's foreign exchange reserves climbed by $3.09 billion to $479.57 billion in the week ended April 17.

Economies across the globe are facing uncertainties, which have been accentuated with the coronavirus pandemic that has not only snuffed out lakhs of lives but also significantly disrupted economic activities worldwide.