How does political stability in a country impact its currency value, especially in the context of inflation and capital flows?

Political stability in a country is very important because it affects how people and businesses feel about investing there. When a country is stable, investors are more likely to put their money into it, which increases demand for its currency. This can help keep the currency strong, especially during times of inflation, when prices are rising. For example, if a country like Canada has stable leadership and policies, more investors might buy Canadian dollars to invest in businesses there, boosting the currency’s value. In contrast, if a country faces political turmoil, investors may pull out their money, leading to a decrease in currency value and potentially worsening inflation.