Question 352 pts

Questions 35-39 are based on the following information:

In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and -1.5% in China for the next two years. Based on this information, answer the following questions regarding your prediction on foreign exchange rate.

According to the above information,__________(USD or Chinese Yuan?) is expected to depreciate in value in year 2014 if parity relations hold. (2 points)