With a higher cash rate, the Australian Dollar (AUD) will appreciate against other currencies. Since the value of AUD has increased, it may prompt foreign investors to seek high returns by investing in Australian Commodities. This results in an increase of demand for AUD since its value is higher in foreign exchange markets which leads to an increase for imports due to converted foreign investors.

For example, if the Australian cash rate increases from 3.85% to 4.10%, there are potential investors from the UK who are willing to invest in AUD because of the higher interest rates. They will convert Great British Pounds (GBP) into AUD or sell cheaper commodities to obtain AUD.