Foreign portfolio investment (FPI) refers to the investment in financial assets, such as stocks and bonds, in a country by investors from another country. This type of investment allows individuals and institutions to diversify their portfolios and gain exposure to different markets without directly owning physical assets. FPI is typically considered a short-term investment strategy, as investors may quickly buy and sell their holdings based on market conditions. It plays a crucial role in providing liquidity to financial markets and can influence the economic stability of the host country by affecting exchange rates and capital flows.