Reference no: EM131840235

Strong Australian dollar = import becomes cheaper and reduce inflationary pressure -> allow the RBA to set a lower interest rate. But export is less competitive, tourism industry with less visitors

Weak Australian dollar = exports are more competitive. Result in higher inflation, higher interest rate, discouraging investment 

When a currency depreciates and theirs capital flight countries often raise interest rates to prevent it, im confused dont high interest rates discourage investments so how would raising interest rates prevent capital flight