Capital flight is most likely to occur when the value of the domestic currency is depreciating rapidly because of hyperinflation, or when a country's economic prospects are shaky in other respects.

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Capital flight refers to the large-scale and sudden outflow of capital from a country. It is more likely to occur when investors perceive that the economic prospects of a country are deteriorating, or when the value of the domestic currency is depreciating rapidly due to hyperinflation. In such situations, investors try to move their money out of the country to protect their wealth and avoid losses.

Capital Flight Is Most Likely to Occur When the Value