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A large amount of public debt means that the government of a country will have to make huge interest payments. Investors will analyze whether these payments can be collected from the tax i.e. from existing money supply. If not, then this signals that the country will monetize its debt i.e. print more currency and pay off the debt. Since a huge public debt today is a signal of problems coming up in the future, the Forex market prices this too in the value that is quoted.
However, it needs to be understood that once again there is a relative comparison between the public debts of the two countries in question. Absolute amounts may not matter as much!
However, it needs to be understood that once again there is a relative comparison between the public debts of the two countries in question. Absolute amounts may not matter as much!