A speculative attack occurs when investors sell a currency en masse, anticipating its devaluation, which can lead to a self-fulfilling prophecy as the selling pressure forces the currency to devalue. This phenomenon is often triggered by a lack of confidence in a country's economic policies or its ability to maintain its currency's value.

Speculative Attack

speculative attack

sell a currency

Anticipating devaluation

A self-fulfilling prophecy is a psychological phenomenon where a belief or expectation, whether accurate or not, influences actions in a way that causes the belief to become true. This cycle can reinforce stereotypes and biases, impacting individual behavior and societal structures.

self-fulfilling prophecy

selling pressure

Currency devaluation is a deliberate downward adjustment to a country's currency value relative to another currency, group of currencies, or standard. It is often used by governments to boost exports by making their goods cheaper on the international market, but it can lead to inflation and reduced purchasing power domestically.

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