How does political instability affect the value of a country s currency?

Political instability can lead to uncertainty among investors and consumers, causing them to lose confidence in a country's economic prospects. This often results in capital flight, where investors withdraw their funds, leading to decreased demand for the currency. Additionally, instability can disrupt trade and economic activities, further weakening the currency's value. As a result, the currency may depreciate against others, reflecting the heightened risk associated with the unstable political environment.