If the U.S. and Japanese inflation rates for the next 1-year period is 4.5% and 2.8%, respectively, and the exchange rate is currently 96.57 /$ , what would you forecast the exchange rate to be in 1 year? (HINT: Use Purchase Power Parity to forecast E(e) and then use it to find E(S1yr). E(e ) = E ( $) E ( Fx) indicates how the foreign currency is expected to behave relative to the USD ; then E(St ) = S0 / (1 + E(e )) where the Spot at time = 0 is in European terms. )