A study on the application of neural network to the interrelationship among Renminbi and foreign currencies

Abstract

Due to the apparent advantages such as huge market and low labor cost, which increase worldwide manufacturers and investors more interest into the emerging economy of Chinese market in this decade. To understand the exchange rate among international currencies is one of the key issues for successful foreign invests. Since Chinese authorities changed the fixed exchange rate into floating exchange rate in July 2005, the fluctuation of Renminbi (Chinese Dollar) has become the main contention of all investors The fluctuation of exchange rates is affected by complicate economical and governmental factors which become hardly to predict. This study takes the rises and falls of exchange rate of Renminbi as the subject of the research without considering the factors of other economic indexes or bank interest rates. This study adoptsartificial intelligence neural network as a tool for verifying hypotheses with the historical data of past exchanges rates of foreign currencies. In order to differ from the past economic and statistic models that have been explored fore many times, a variety of economic indexes or bank interest rates will not be taken into account as factor in this paper. Furthermore, the foreign currencies exchange rates published by Federal Reserve Bank of New York are adopted as a factor. This paper tries to figure out a simpler method to predict the fluctuation of Renminbi