Exercise 10-2 Critical Thinking Thoroughly respond to each of the following questions. The interest rate on South Korean government securities with one-year maturity is 4 percent, and the expected inflation rate for the coming year is 2 percent. The interest rate on U.S. Government securities with one-year maturity is 7 percent, and the expected inflation rate is 5 percent. The current spot exchange rate for the Korean Won is $1 = W 1.20. Forecast the spot exchange rate one year from today. Explain the logic of your answer. Re-read the Management Focus "Embraer", p. 276. What does the recent economic history of Brazil tell you about the relationship between price inflation and exchange rates? What other factors might determine exchange rates for the Brazilian Real? Case 10: The Mexican Peso, The Japanese Yen, and Pokemon 1. Prepare a summary of this case When playing pokemon go in Mexico, you must buy pokecoins. However, recently the peso has been falling in value against the yen. So, when pokecoins were purchased, the Japanese were losing out because of the currency exchange between pesos and yen. When looking at exchanging money, people will trade pesos for US dollars and then trade for yen. The US is the most widely traded and most liquid currency. Japan is known for being stagnant with low inflation and a strong currency. However, the peso is the most liquid emerging market currency out there. After the election of President Trump, the Mexican peso hit an all-time value low against the US dollar since he treated to retreat from NAFTA