The Zhitong Finance App learned that thanks to the Bank of India's special arrangement to attract overseas capital, India bought a record amount of US Treasury bonds in July. According to the latest data from the US Treasury Department, India's net purchases of US Treasury bonds in July jumped from US$3.39 billion in June to US$15.2 billion, and its holdings rose to the highest level in 10 months.

Previously, under the special window mechanism announced by the Bank of India in early June, capital inflows reached 40.8 billion US dollars by the end of July. The Bank of India provides preferential swaps for funds raised through expatriate deposits and overseas loans. Capital inflows exceeded expectations, driving India's foreign exchange reserves to a record high.

Vivek Rajpal, Asia strategist at JB Drax Honore in Singapore, said that since the swap operation brought dollar-denominated liabilities to the Bank of India, the central bank would invest capital in dollar assets.

Rajpal said that investing part of the capital in US Treasury bonds would enable the Bank of India to earn holding income and help offset the costs of related measures. Given that India's foreign exchange reserves continued to rise in August, and total inflows soared to 136 billion US dollars under the Bank of India mechanism, he expects the scale of India's purchases of US Treasury bonds to remain high.

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