Sovereign debt crises can disrupt currency markets from "summary" of International Money and Finance by Michael Melvin
A sovereign debt crisis occurs when a government is unable to make payments on its outstanding debt. This can have severe repercussions on the country's economy as well as on the global financial system. One of the ways in which a sovereign debt crisis can disrupt currency markets is through the depreciation of the country's currency. When a country is unable to meet its debt obligations, investors may lose confidence in the government's ability to manage its finances. This can lead to a sell-off of the country's currency, causing its value to decline. The depreciation of the currency can have a cascading effect on the economy, as it makes imports more expens...
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