The stability of the currency relative to the AUD
Academic research indicates thatthe price ofcurrency is the index for exporters.
Devaluation of currency caused by rising prices in the domestic market can give more
chance to domestic exporters because the devaluation of the currency can stimulate
production under certain conditions, and reduce the price of goods abroad which is
beneficial to expand exports(Fabling, 2013). In Australia, devaluation of AUD is beneficial
for exporting wheatto Indonesia.Companied by descending trend of AUD currency,
Australian investors can have more chance to establish companyandsell goods toa foreign
country likeIndonesia. When the price ofAUD currency is going down, the price of
Australianwheat is also going downat acertaindegree. As it is much cheaper to buy the
same goods, purchasing quantity of wheat will increase accordinglywhich brings more
benefits to the exporters. Australian people are witnessing a more stable AUD at present;
as a result, business will be also much more stable which contributes to establishing
long-term partnership and selling wheat to Indonesia.According toglobalfinancial report,
temporary AUD is the mostfrequentlytraded currency and it ranks the fifth place(Fabling,
2013). Wheat isalsothe frequently exported product of Australia and if currency has high
level of stability and low level of volatility,home basein Australia will benefit from it.
The exchange rate regime in Indonesia
Indonesia is applying theManaged Floating Rate System currently which means that with
the current economic situation, the central bank can intervene into the foreign exchange
market now so that the rise and fall of exchange rate can conform to benefits of own
