Research Article

Modeling the British Pound Sterling to Nigerian Naira Exchange Rate During the Covid-19 Pandemic

Authors

  • Ugochinyere Ihuoma Nwosu Department of Statistics, Federal University of Technology Owerri, Nigeria
  • Chukwudi Paul Obite Department of Statistics, Federal University of Technology Owerri, Nigeria
  • Prince Henry Osuagwu Department of Statistics, Federal University of Technology Owerri, Nigeria
  • Obioma Gertrude Onukwube Department of Statistics, Federal University of Technology Owerri, Nigeria

Abstract

The British Pound Sterling (GBP) to Nigerian Naira (NGN) exchange rate has been grossly affected by the Coronavirus 2019 (Covid-19) pandemic. It has become pertinent to identify robust models that will help to cope with the variability associated with the pandemic. Many original studies found the ARIMA method to be highly useful in modeling and forecasting exchange rates. However, not much work has been done on modeling the GBP and NGN exchange rate during the covid-19 pandemic using machine learning models. This study focuses on modeling the exchange rate between the GPB and NGN during the period of the Covid-19 pandemic by adopting the process of model comparison using the Artificial Neural Network (ANN), Autoregressive Integrated Moving Average (ARIMA), and Random Forest models to obtain an optimal model and forecasts from the model. Secondary data of the GBP to NGN exchange rate within the period of the Covid-19 pandemic from exchangerate.org.uk were used. The two machine learning models (ANN and random forest) performed better than the ARIMA model. The RF, though performed well in the training set, was outperformed in the test set by the ANN model. The ANN model was chosen to model and forecast the GBP and NGN exchange rate during the Covid-19 pandemic. The predicted fall in the GBP to NGN exchange rate to 570 by December 2021 and 575 by September 2022 using the ANN model will have a huge effect on the economy of the country as the country depends largely on imported goods. The Government and policymakers must put in place structural measures that will avoid the looming crisis.

Article information

Journal

Journal of Mathematics and Statistics Studies

Volume (Issue)

2 (2)

Pages

25-35

Published

2021-10-19

How to Cite

Modeling the British Pound Sterling to Nigerian Naira Exchange Rate During the Covid-19 Pandemic. (2021). Journal of Mathematics and Statistics Studies, 2(2), 25-35. https://doi.org/10.32996/jmss.2021.2.2.4

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Keywords:

ARIMA, Artificial Neural Network, British Pound Sterling, Exchange Rate, Nigerian Naira, Random Forest

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