116 INTERNATIONAL FINANCIAL MANAGEMENT
in China, 3.2 percent in India, 7.0 percent in Indonesia, 1.9 percent in Japan, 2.2 percent in
Mexico, 3.4 percent in Russian Federation, 5.2 percent in Singapore, 1.7 percent in the US,
and (-) 1.2 percent in the UK. The other factors remaining the same, the countries with a
higher interest rate would attract more foreign funds than the countries with low interest
rates.
Political Factors
Political factors do influence the demand and supply of foreign currency. Political stability
in the country may attract a large amount of investment funding in foreign currencies, as
investors may find the country to be less risky and more rewardingto invest. On the other
hand, any instability in the political gover ...