The movement of capital from one investment to another that is more stable or more profitable.
This includes both individual and investment capital. The most common example of capital flight is between countries, for the purpose of avoiding country-specific risks such as political turmoil, though it may also occur between regions within a country. Capital flight of large enough proportions can affect a country's entire economy. For example, economic instability resulting from high inflation or political revolution in many Latin American countries has driven large amounts of capital to the United States which is considered a safe haven.
Capital flight is often directly related to currency exchange, as capital is transferred out of an economy whose currency is rapidly inflating or highly volatile. Following the occurrence of capital flight, a country's currency will typically experience significant devaluation, a fall in the exchange rate.
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