Q3. The one-year deposit rates in Japan and in Korea are 1% per year; the inflation rates in the two countries are 0% per year. The exchange rate is 1JPY=100KRW. People expect the current interest rates, inflation rates, and exchange rates to continue forever. Suddenly, the Bank of Korea announces a rate hike and the one-year deposit rate in Korea becomes 3%. The Bank of Korea says that it will keep the interest rate at 3% for next 10 years (and then will move it down to 1% again) and that money supply will shrink by 50% to achieve the interest rate goal. Describe what will happen to the exchange rate now and also for the next 10 years, using the overshooting model of Dornbusch