2012 Sample Q34-When Currency should be hedged 2012, part, remember, currency, question

LiquidAssets10

I got this question wrong. and very confused.
I get the part that the market expects foreign currency to depreciate 0.75, well manager expects a 0.35% deprecitation.But it is always hard for me to remember whether a manager should hedge a overprice or an underpriced foreign currency?
Should we always hedge an overpriced one?