The End of Dollar Dominance? Nations Seek Alternatives to the Greenback

Avik Reengusia
Feb 20
2 min read

The Reserve Bank of India (RBI) has been on a gold-buying spree, adding 72.6 tonnes in 2024- a fourfold increase from the previous year. This aggressive accumulation comes against the backdrop of global economic uncertainty and Trump’s fresh round of tariff threats, making gold the financial world’s preferred safety net. Naturally, this has fueled speculation about India reassessing its dependence on the U.S. dollar.

However, Finance Minister Nirmala Sitharaman has dismissed such claims, clarifying that the move is part of forex reserve diversification, not an attempt to exit the “dollar club.”

Gold Reserves: India’s total gold reserves now stand at 876.18 tonnes—its highest ever.
Forex Holdings: As of January 31, 2025, India’s total forex reserves reached $630.6 billion, with gold reserves alone accounting for $70.89 billion—a $1.2 billion surge in just a week.
Market Trends: Gold prices have already climbed 10% in 2025, reflecting heightened investor interest.
Global Rank: India was the third-largest net gold buyer in 2024, behind Poland and Turkey.

The RBI’s growing gold appetite has fueled speculation about India shifting away from the U.S. dollar. However, when Congress MP Manish Tewari raised the issue in the Lok Sabha, Sitharaman was quick to clarify: the RBI's gold purchases are for portfolio balancing, not a currency realignment.

According to ANI, the RBI’s strategy is aimed at strengthening India’s forex reserves, ensuring resilience against global economic fluctuations. While the U.S. dollar still dominates India's reserves, gold is playing an increasingly important supporting role—a hedge against potential volatility in global markets.

The Bigger Picture: Why Gold, Why Now?

Diversification, Not De-Dollarization: While "de-dollarization" is gaining traction globally, India’s finance ministry has made it clear—more gold does not mean less reliance on the U.S. dollar. The RBI is simply spreading its risk.

Geopolitical Uncertainty: With rising global tensions and trade wars, gold remains one of the most reliable safe-haven assets.

Inflation & Market Volatility Hedge: As inflation and economic uncertainty persist, central banks worldwide- including China, Russia, and European nations—are ramping up their gold holdings.

While de-dollarization debates continue, India’s gold strategy is more about smart reserve management than a shift away from the greenback. History shows that when uncertainty rises, gold remains a trusted asset and India is making sure it has plenty of it.