New Delhi, Sept. 2 -- Is there a twist in India's foreign exchange diversification tale? An International Monetary Fund (IMF) paper in 2022 identified India as among the major countries diversifying its forex reserves to non-traditional currencies. At 10% of its reserves, India's share of non-traditional currencies was at the same level as those of Germany and Switzerland, but below those of Indonesia, South Africa and France. By the latest count, India's forex reserves stood at $729 billion.

Foreign currency assets (FCA) made up 81.1% of these and gold 16.7%. Note that FCA includes foreign currency investments in Treasury bonds and the like, as well as deposits denominated in mainstream currencies such as the dollar, euro, pound and yen...