Foreign direct investment leads to demand for a country's currency.

Question

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When foreign direct investment occurs, foreign investors need to convert their currency into the local currency of the country they are investing in. This creates a natural demand for the local currency, leading to an increase in its value relative to other currencies on the foreign exchange market. This is why countries often encourage foreign direct investment as a way to boost their own currency and economy.

Foreign Direct Investment Leads to Demand for a Country's Currency