service its deficit by way of selling domestic bonds, thereby increasing the supply of money, it must increase the volume of saleable securities to foreigners, which in turn creates a decrease in their value.

A significant debt can prove a concern for foreign investors, should they believe there is a risk of the country defaulting on its obligations. They will be reluctant to purchase securities subject to that particular currency, if there is a perceived, significant risk of default. It is for this reason that the debt rating of a country;