What does a currency's depreciation mean in the context of sanctions?

When a currency depreciates, it means that its value has decreased relative to other currencies. In the context of sanctions, such a depreciation can signal economic instability or a lack of confidence in the country's economic system. Foreign investors are generally wary of investing in a country where the currency is depreciating, as this indicates potential risks such as inflation, reduced purchasing power, and unfavorable economic conditions that may arise from sanctions.

In many cases, sanctions can restrict a country's ability to engage in international trade and access global financial markets. This further exacerbates the situation by causing uncertainty, leading to a reluctance among foreign investors to commit their capital. As a result, a depreciation of the currency under these conditions is often accompanied by diminishing foreign investment, making the correct understanding of this option crucial.