Definition
Dollar Index (DXY)
The US Dollar Index (DXY) measures the dollar's value against a basket of six major currencies, dominated by the euro, serving as a global gauge of dollar strength.
The DXY rises when the dollar strengthens against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc. It is the headline measure of broad dollar direction.
A rising DXY typically pressures emerging-market currencies including the rupee, as capital flows toward dollar assets and commodity import bills rise. Indian traders watch DXY closely because dollar strength often coincides with USDINR climbing and FII outflows from Indian equities and bonds.
Related terms
- USDINRUSDINR is the exchange rate of the US dollar against the Indian rupee, the most-watched currency pair in India and a key barometer of capital flows and import costs.
- Safe-Haven CurrencyA safe-haven currency tends to hold or gain value during global stress as investors seek security, the classic examples being the US dollar, Swiss franc and Japanese yen.
- Risk-On / Risk-OffRisk-on and risk-off describe market regimes: in risk-on, investors buy equities and emerging assets, while in risk-off they flee to safe havens like bonds, gold and the dollar.
- Federal Open Market Committee (FOMC)The FOMC is the Federal Reserve's policy-setting committee that meets eight times a year to decide US interest rates and the path of monetary policy.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.