The change in the exchange rate caused by the increase in coffee output has triggered intense conflict and debate within Javanian society. The president is especially confused about how a boom in the country's leading export industry could lead to exchange rate that some Javanians would complain about.

First, she has asked you to identify and briefly explain the economic interests of several groups in a stronger or weaker peso:

• Owners of tin mines (tin being the country's second largest export);
• Owners of textile factories (textiles being produced mainly for the domestic market, but with stiff competition from imports);
• Urban dwellers (whose household budgets tend to include a large portion of consumer goods that are importable);
• The Javanian trade-union federation (which draws a large portion of its membership from the tin and textile industries);

The president is just beginning to think about her campaign strategy for the next general election, to take place in a year and a half. Some public figures have argued that the central bank should alter its interest-rate policies to counter the current trend in the peso-dollar exchange rate.

Therefore, the president also wants to know from you:

• Whether it would make more sense to raise or to lower interest rates, if the goal is to counter the current trend in the peso-dollar exchange rate?
• Bearing in mind the overall political and economic context, whether you think she should support a change in interest-rate policy?

Present your analysis and recommendations. Be sure to explain yourself clearly, because the president is still confused about why the exchange rate has become a politicized issue. (Not to mention that she is feeling very sensitive after a major international business magazine recently referred to her as the undereducated leader of an overcaffeinated country.)