Which statement accurately describes the effect of a rise in Pakistan's net capital outflow on the foreign exchange market?

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A rise in Pakistan’s net capital outflow leads to a higher supply of rupees, causing the rupee to depreciate.An increase in Pakistan’s net capital outflow results in greater demand for rupees, making the rupee appreciate.When Pakistan’s net capital outflow rises, demand for rupees increases, leading to rupee depreciation.A growth in Pakistan’s net capital outflow raises the supply of rupees, causing the rupee to appreciate.None of the above statements are correct.

Explanation

When Pakistan experiences an increase in net capital outflow, more rupees are supplied to the foreign exchange market as investors convert rupees into foreign currency. This increased supply of rupees causes the rupee to depreciate in value.