Rand/USD 7-Day Prediction Using ARIMA Model

Tool used: Python

Project Overview

Exchange rates play an important role in international trade and financial planning. Businesses involved in import and export activities rely on exchange rate trends to make informed financial decisions. Understanding and predicting short-term movements in exchange rates can help organizations anticipate potential costs or gains.

This project focuses on analyzing the historical Rand/USD exchange rate and developing a predictive model to forecast the exchange rate for the next seven days. The analysis was conducted using Python within a VS Code notebook environment.

Project Objective

The objectives of this project are:

• To analyze historical exchange rate patterns using Rand/USD daily data.
• To build a predictive time-series model capable of forecasting the exchange rate seven days ahead.
• To generate insights that could support short-term financial planning and decision-making.

Data Description

The dataset used in this analysis contains daily Rand/USD exchange rate values obtained from Standard Bank.

Dataset Characteristics

• Currency Pair: Rand / US Dollar
• Data Frequency: Daily observations
• Time Period: May 2023 – May 2024
• Variable: Daily exchange rate value
• Note: Weekends are excluded since currency markets are typically not traded during weekends.

The dataset provides sufficient historical information to analyze patterns and develop a short-term forecasting model.