In October $2013,$ there is a consensus in the capital market that the annual inflation rate is likely to be $3\mathrm{.}5\%$ in US and $-1\mathrm{.}5\%$ in China for the next two years. Based on this information, answer the following questions regarding your prediction on foreign exchange rate.

Chinese Yuan will be selling at a forward $\_\_\_\_\_$

$($premium$/$discount$).$ The size of the forward premium$/$discount is $\_\_\_\_\_\_\_\_\_$

$\%.$ Use approximate version of parity relationships. $(2$ points$)$