US Economic Boom Drains India: FIIs Exit, Rupee Weakens, Markets Lag

• US economy grew 4.3% in Q3 2025, its fastest in two years, making US assets attractive and reducing pressure on the Fed for quick rate cuts.
• India faces FII exodus: ₹1.6 lakh crore withdrawn in 2025 due to strong US returns, rupee depreciation (record low 91.07), and increased hedging costs.
• Indian equities are among the worst-performing major markets in 2025, and the rupee is one of the most depreciating currencies, deterring foreign investment.
• Hopes for $25 billion from JP Morgan bond index entry have faded; domestic investor support is also slowing with declining volumes.
• FII return hinges on US rate cuts, improved Indian corporate earnings, rupee stability, and more attractive valuations.

Why It Matters: Strong US economy and weak rupee are driving FIIs away from India, impacting markets and growth.