“Lower Dollar, Higher Returns: The DXY–FII Connection for India’s Markets”

***** dollar funding FIIs often borrow in USD to finance rupee-equity purchases. A weaker dollar cuts their interest costs, lifting net returns on Indian stocks. 2. Enhanced currency gains When DXY falls, the INR often firms up. That rupee appreciation adds an extra layer of profit when FIIs convert equity gains back into dollars. ***** yield spread A weaker dollar usually coincides with softer US Treasury yields, widening the gap between India’s ~7% 10-yr yields and US bond yields—boosting India’s fixed-income allure for yield-hungry FIIs. 4.“Risk-on” sentiment Dollar weakness often signals rising global risk appetite. FIIs chase higher-growth, higher-beta emerging markets like India as they pivot away from safe-haven assets.