The Australian dollar fell against the U.S. dollar to its lowest value in the past two weeks.

Question:

The Australian dollar fell against the U.S. dollar to its lowest value in the past two weeks. The CPI inflation was reported to be generally as expected, but not strong enough to justify expectations for an aggressive interest rate rise by Australia’s central bank next week.
a. What is Australia’s policy? Explain why expectations about the Australian interest rate lowered the value of the Australian dollar against the U.S. dollar.
b. To avoid the fall in the value of the Australian dollar against the U.S. dollar, what action could the central bank of Australia have taken? Would such an action signal a change in Australia’s policy? Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...