If the RBA surprises the market by raising its cash rate target to 3%the AUD will immediately(appreciate / depreciate) against all other currencies. This immediate change of the AUD value is making our exports(cheaper / more expensive) and thus(fosters / dampens) economic activity and inflation.

In Japan the interest rate is close to 0%. Therefore, the AUD is very likely to(appreciate / depreciate)against the Yen over the coming year. In Indonesia the interest rate is around 6%.Therefore, the AUD is very likely to(appreciate / depreciate)against the Indonesian Ruphia over the coming year.