Overestimating the local currency exchange rate means that the local currency exchange rate should not be so high, which is compared with the equilibrium exchange rate. Therefore, in theory, the future exchange rate should be close to the equilibrium exchange rate, that is, there is depreciation expectation.

However, in the real world, the national foreign exchange policy can affect the exchange rate level. Even if the exchange rate is overvalued, as long as the country is willing and able, it can maintain the exchange rate at an overvalued level or even more overvalued.

So it is possible to depreciate and appreciate in the future, depending on which is stronger, the government or the market!