A Novel Hybrid Technique for Exchange Rate Forecasting

Volume 17 , Issue 4 , December 2015 , Pages 165-180

Authors

¹ College of Engineering, Salahaddin University

Exchange rate prices play a significant role in economic and financial systems. The

precise forecasting of the exchange rate will aid to predict the situations of other

aspects in the future. This offers useful information for economist traders to fulfill vital

actions to eliminate risks that might lead to financial losses. One vital and common

approach for forecasting is a quantitative technique. The quantitative technique is split

into two approaches; fundamental and technical analysis. Both approaches have one

different, which is the economic factor. The fundamental analysis uses economic

factors while the other not, but both of them have drawbacks. In fundamental

technique, the forecasters cannot understand the economic factors totally, the values

and quantity of the factors unstable, while the technical analysis neglects the factors

totally. This paper suggests a new technique which is appeared to be as a hybridized of

the both techniques for forecasting exchange rate prices to overcome the issues

mentioned above. The proposed technique makes new factors that have real values and

have a real impact on the accurate result. It also derives the inputs and factors in the

prediction models by a feature extraction technique which produces very accurate

results.

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