With reference to the Foreign Portfolio Investors (FPIs), consider the following statements: 1. Foreign Portfolio Investment is often referred to as hot money. 2. A sell-off by FPIs in India will lead the appreciation of the rupee.Which of the statements given above is/are correct? |ForumIAS

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Q. With reference to the Foreign Portfolio Investors (FPIs), consider the following statements:
1.Foreign Portfolio Investment is often referred to as hot money.
2.A sell-off by FPIs in India will lead the appreciation of the rupee.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] .Neither 1 nor 2

Answer: A

Notes:

Statement 1 is correct: Foreign Portfolio Investment is often referred to as hot money because of its tendency to flee at the first signs of trouble in an economy.
Statement 2 is incorrect: Sell-off by FPIs lead to a decline in the value of local currency.

Source: Article