Question: Using below information: Current spot rate CNY1 = JPY 20 Annual inflation rate in Japan: 0.20% Annual inflation rate in China: 4.5% Applying Purchasing Power

Using below information:

Current spot rate CNY1 = JPY 20

Annual inflation rate in Japan: 0.20%

Annual inflation rate in China: 4.5%

Applying Purchasing Power Parity theory, what should be the expected future spot rate for CNY1?

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