Which of the following scenarios best illustrates the impact of geopolitical factors on foreign exchange rates, considering economic indicators and monetary policy?

Geopolitical factors, like political stability or conflicts between countries, can greatly influence foreign exchange rates. For example, if a country faces political unrest, investors may worry about the economy's future, leading them to sell off that country's currency. This increased selling pressure can cause the currency to lose value compared to others. Additionally, if a country's central bank changes interest rates in response to geopolitical events, it can affect how attractive that currency is for investors. For instance, if a nation raises interest rates to combat inflation during a conflict, it might strengthen its currency as investors seek higher returns.