Dharug Ltd is an Australian company with two foreign operations, one in Indonesia and the other in South Korea. The Indonesian operation has as its major activity the distribution in Indonesia of Dharug Ltd’s products. It has been agreed that the Indonesian operation will, for a period of time, retain all profits in order to expand its distribution network in Indonesia. In the past it has remitted most of its profits to Dharug Ltd.

The South Korean operation has been established to manufacture a range of products for the South-East Asian market. There is also an expectation that it could in the future become the major manufacturing plant for Dharug Ltd and provide a supply of products for the Australian market.

Required 

Based on the information provided, determine the functional currency of the foreign operations. Explain your choice.