Time series analysis on monthly average Rwanda currency exchange rate against US dollars
 

Accepted 28^th February, 2014

Girum Taye Zeleke, DUKUNDANE Didier, NTWALI Michel Pacifique
University of Rwanda, College of Science and Technology (Kigali Campus)
Department of Applied Mathematics, B.P 3900 Kigali, Rwanda.
 

In this work, we broadly describe the exchange rate of Rwandan francs to US dollar on the basis of monthly data from 2003-2012. The Rwandan Franc is the currency of Rwanda. The main objective is to apply appropriate time series model for monthly Rwandan average currency exchange rates against US dollar. The data used were secondary data of mean monthly currency exchange rates in Rwanda from January 2003 to December 2012. Those data are collected from National Bank of Rwanda (NBR) head office from the department of statistics. In this study the result indicates, the appropriate time series model fitted for monthly average exchange rate of RWF against USD is ARIMA (0, 2, 1). The forecasted model and the original data are going in the same pattern; besides the error terms are normally distributed and based on the fitted model the monthly average exchange rate of RWF against USD in the next 5 years especially in December 2017 will be 767.5146 RWF. The result of this research found that the exchange value of Rwanda currency (Rwandan francs) showed a consistent decrease against US dollar. SPSS software was used to capture and analyze the data and to fit appropriate time series model which help to forecast monthly average Rwandan Franc against US dollar. Therefore, it is recommended to the government of Rwanda to change the strategies in order to increase the exchange value of Rwanda currency.

Key words: Currency exchange rates, time series model, ARIMA.