Countries put limitations on the convertibility of their currency when they are concerned that:

Question

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Limiting the convertibility of currency protects a country's foreign reserves because it discourages excessive outflows of capital. If there is a sudden rush of people converting their domestic currency into other currencies, it can deplete the nation's foreign reserves. Therefore, countries put limitations on currency conversions to protect their foreign reserves. Options A and D are the opposite of the right choice, and option B is not a major concern for countries as they have control over their monetary policy.

Countries Put Limitations on the Convertibility of Their Currency When