If a euro deposit in a bank in Paris, France, earns interest of 4 per cent a year and a yen deposit in Tokyo, Japan, earns 0.5 per cent a year, everything else remaining the same and adjusted for risk, what is the exchange rate expectation of the Japanese yen? All of the answers here are incorrect Euro is expected to depreciate by 3.5% Euro is expected to appreciate by 3.5% Yen is expected to appreciate by 3.5% Yen is expected to depreciate by 3.5%