How does speculation in the currency market influence the effectiveness of a country's fiscal policy in achieving currency appreciation?

Speculation in the currency market refers to investors buying and selling currencies based on what they think will happen in the future. When many investors believe a country's currency will appreciate, they start buying that currency, which increases its demand. This demand can lead to an increase in the currency's value, making it appreciate even before any actual changes in the country's economy take place. For example, if traders expect that a country will lower its interest rates, they might sell that currency, causing it to depreciate. Therefore, if a country's government tries to use fiscal policy, like increasing spending or cutting taxes, to boost the economy, speculation can either support or undermine those efforts based on how investors perceive future economic conditions.