Political unstability and valuation of assets

Political uncertainty in any country makes it difficult to value assets in the future, since unexpected policy decisions may quickly change the valuation of a currency. In such situations, the exchange rates tend to weakened and be more volatile. At the same time, the willingness of investors to have their money invested in the country fall sharply, because you do not know exactly which politics will be conducted in the future.
As an example of political unrest, we have Venezuela been talking about nationalizing certain assets and later also done that. In such situations, investors are forced to sell their assets, way below market prices. The one only only allowed buyer will be the state. In such situations, many investors escape, thus reducing the demand of the currency and weaken the country’s exchange rate.
Other examples of political concern is when a country changes its government all too often and thus are not consistent with their elections. It creates political uncertainty because you do not know exactly when and how a new government will lead the country.
Around election year there may be some political unrest, especially in countries where the outcome are very uncertain. This may of course lead to volatile exchange rate.