What effect can uncertainty caused by geopolitical issues have on currency demand?

Uncertainty stemming from geopolitical issues often leads investors to reassess their investment strategies due to increased risk. In times of such uncertainty, there is typically a flight to safety, where investors seek more stable and reliable assets to protect their investments. This behavior can manifest as increased demand for certain currencies considered "safe-haven" currencies, such as the US Dollar, Swiss Franc, or Japanese Yen.

Investors are inclined to move their funds toward these currencies to minimize risk, resulting in a higher demand for them. This trend occurs because the perceived stability and reliability of these currencies can offer a buffer against market volatility and potential losses tied to riskier investments.

The other options suggest different impacts of geopolitical uncertainty, such as a general decrease in demand or a balanced shift, which do not accurately reflect the behavioral patterns of investors in such scenarios. In reality, the demand for currencies can fluctuate greatly, but during periods of uncertainty, a significant push towards safer assets is a common response.