Political risk effects exchange market

A factor that may highly influence the exchange rate in the short, medium and long term are political unrest as in Pakistan . The main reason is that it is difficult to estimate what will happen in a country with political unrest.It also give questions about how economic policy will look like in the future. As an investors, you probobly have to pay for this kind of concern, which may be reflected in the exchange rate and foreign investment in the country.