IMPACT OF COVID 19 PANDEMIC AND GEOPOLITICS ON

WORLD CURRENCIES

(PROJECT PROPOSAL)

LMCW2022
DATA MANAGEMENT AND ANALYTICS

LECTURER
Dr. Yusnaini Md Yusoff

GROUP 5

WANG XIAO A191420

XU QIANQIAN A198108

FARHAIN BT MOHD MUSTAPA A197767

ZHAO ZIYI A197826

YOU SHUYAO A197623

Universiti Kebangsaan Malaysia

2024
1. Data Analysis project title

Currency Exchange Patterns: CAD, AUD and Malaysian Ringgit Analysis

2. Introduction and Background of data sources

2.1 Introduction to data sources

Understanding currency exchange dynamics is critical in today's global economy as it helps

predict economic trends and make informed investment decisions. This analysis focuses on
exchange patterns between the Canadian Dollar (CAD), the Australian Dollar (AUD) and the
Malaysian Ringgit (MYR). The Canadian and Australian dollars were chosen due to a desire to
explore unique economic indicators in currencies that are less frequently analyzed in academic
settings, thus avoiding duplication and leveraging new data insights.

We focus on data from February 2, 2018 to February 29, 2024. This period spans both stable and
volatile economic phases, providing a window into the rise and fall of the Canadian dollar,
Australian dollar and Malaysian ringgit exchange rates. Specifically, we focus on the "purchase"
rate, which reflects the price at which banks purchase foreign currency. This selection allows us
to gain insight into the purchasing power of the Malaysian Ringgit and its economic interaction
with the currencies of Canada and Australia.

Collecting the data is very simple: navigate to the "Rate" section of the bank's website, enter the
date, select the session "1130", then "Purchase" under the "Rate Type" section. For the quotation
part, we choose "ringgit/foreign country" and finally export the data set to the CSV file. The
document is more than just a collection of numbers, it represents the economic narrative of the
currencies involved.

2.2 Data source background

Data acquisition background：

Our examination of currency exchange patterns draws on extensive records maintained by Bank
Negara Malaysia. The central bank's website, known for its comprehensive repository of
economic data, is our source for historical exchange rates, which is critical to this analysis.

Historical background：

Over the past few years, the COVID-19 pandemic and ensuing global geopolitical uncertainty
have given the currencies of Canada, Australia and Malaysia unprecedented volatility. This
uncertainty has hindered the recovery momentum of many countries' economies. The Canadian
dollar and the Australian dollar are currencies closely linked to commodities. The Canadian
dollar fluctuates with the ups and downs of the international oil market, while the Australian
dollar moves with export commodities such as iron ore and coal. Fluctuating with changes in
price, these resources are the backbone of the Australian economy.

In such a general environment, the Malaysian Ringgit (MYR) appears to be particularly

sensitive, having to deal with domestic policy adjustments and international economic pressures.
As an export-driven economy, Malaysia's ringgit is sensitive to changes in global demand for its
main export commodities such as palm oil and electronics. Trade disruptions and uncertainty
during the pandemic have further exacerbated currency volatility. At the same time, geopolitical
twists and turns, including complex trade negotiations, regional conflicts, and changes in foreign
investment, have affected the stability of the ringgit.

Cyclical fluctuations in commodity markets have a profound impact on the Canadian and
Australian dollars. They thrive when resources are abundant and come under pressure when
resource prices fall. At the same time, the Malaysian ringgit must find a balance in the complex
pattern of the regional economy and constantly adapt to changes in ASEAN's economic policies
and economic competition with neighboring countries.

In recent years, central bank policy changes - whether they are fine-tuning interest rates or
broader fiscal strategies - have had a significant impact on the value of these currencies. The
Bank of Canada's direct control over the Canadian dollar, the Reserve Bank of Australia's
strategic decisions, and Bank Negara Malaysia's sophisticated manipulation of the ringgit are all
forces that cannot be ignored behind changes in currency values.
3. Objectives of Data Analysis

In an increasingly interconnected global economy, the fluctuations in currency exchange rates

play a crucial role in international trade, investment decisions, and economic stability, which
disclose the current state of a country’s GDP growth, and economic development. Under the
background of the COVID-19 pandemic and evolving geopolitical dynamics, it becomes vital to
explore into the intricacies of currency movements to ascertain their influences on investment
opportunities. Therefore, our group’s objectives of this data analysis endeavor extend and not
just a simple statistical analysis, we want to apply the knowledge we learned in the course
LMCW 2022 Data Management and Analytics to understand the data and also encompass a
versatile exploration aimed at demonstrating the complexities and differences of currency
dynamics and how to make strategic investment decisions for the group of citra company.

Firstly, by understanding the impact of external factors, our group thinks the first
objective of this data analysis is to disclose the complexity of external factors that influence the
exchange rates of the Canadian Dollar (CAD) and Australian Dollar (AUD) relative to the
Malaysian Ringgit (RM). These external factors encompass a broad aspect, ranging from
macroeconomic indicators such as GDP growth, inflation rates, and monetary policies to
geopolitical events, trade tensions, current social events and global market sentiment.Our group
considers that GDP growth has a direct influence on their currency, Gross Domestic Product
(GDP) growth is a crucial macroeconomic indicator that reflects the overall health and
performance of a country's economy. A GDP growth typically signifies a thriving economy,
attracting foreign investments and bolstering confidence in the domestic currency. Conversely,
sluggish GDP growth or negative growth can weaken investor sentiment and lead to currency
depreciation. For instance A strong GDP growth in Canada can lead to an appreciation of the
Canadian Dollar (CAD) and Australian Dollar (AUD), driven by increased investor demand and
positive market sentiment. Conversely, the Malaysian Ringgit (RM) may face challenges such as
reduced export competitiveness and capital outflows in response to these global economic
dynamics. Understanding these interrelationships is essential for assessing currency movements
and their implications for investment decisions. By scrutinizing historical data including the
before Covid-19, during the Covid-19, and post-Covid-19 periods, we aim to recognize the
minor responses of CAD and AUD to various external stimuli. Furthermore, by pairing these
responses against the performance of RM, we seek to identify relative strengths and
vulnerabilities, thereby facilitating a comprehensive understanding of currency dynamics.

Secondly, we aimed at identifying long-term trends and short-term fluctuations.

Currency markets exhibit a complex interplay of long-term trends and short-term fluctuations,
influenced by a combination of economic, political, and psychological factors. As such, the
objective of this data analysis is to delineate the underlying trends and patterns characterizing the
exchange rates of CAD and AUD versus RM. Using advanced statistical techniques such as time
series analysis, this analysis is a powerful tool used to identify and understand long-term trends
and short-term fluctuations in data over time, including currency exchange rates like the
Canadian Dollar (CAD), Australian Dollar (AUD), and Malaysian Ringgit (RM). By leveraging
time series analysis techniques, analysts can gain valuable insights into the dynamics of currency
exchange rates, differentiate between long-term trends and short-term fluctuations, and make
data-driven decisions in the context of global financial markets. We try to figure out the
enduring trends amidst the noise of short-term volatility. By elucidating these trends, we may
provide valuable insights into the relative stability and resilience of CAD and AUD, thereby
enabling investors to adopt a long-term perspective while navigating the currency markets.

The third objective is assessing risk and volatility, this data analysis revolves around
assessing the risk and volatility associated with CAD and AUD compared to RM. Volatility in
currency markets not only poses challenges but also presents lucrative opportunities for astute
investors. Volatility measures the degree of fluctuation in currency exchange rates over a specific
period. Assessing volatility is crucial for investors as it helps gauge the potential risks associated
with currency investments and informs decision-making on hedging strategies, and This type of
analysis provides valuable insights for investors to make informed decisions and manage
currency-related risks effectively in their investment portfolios. Understanding volatility
dynamics is essential for navigating currency markets and optimizing investment strategies in a
globalized financial landscape.

Fourthly, Informing Investment Decisions. Ultimately, the overarching objective of this

data analysis endeavor is to empower the Citra Group of Companies with actionable insights to
make informed investment decisions in Canada and Australia. By synthesizing quantitative
analysis with qualitative contextualization, we aim to provide a holistic perspective on the
investment landscape, delineating the opportunities and risks inherent in each market. Whether it
pertains to strategic asset allocation, hedging strategies, or tactical trading decisions, the insights
gleaned from this analysis will serve as a compass guiding the investment endeavors of the Citra
Group, thereby enhancing their competitiveness and resilience in an ever-evolving global
marketplace.

In conclusion, the objectives of this data analysis transcend mere statistical inquiry; they
encapsulate a comprehensive exploration aimed at unraveling the complexities of currency
dynamics and informing strategic investment decisions. By delineating the impact of external
factors, identifying long-term trends, assessing risk and volatility, and informing investment
decisions, this analysis seeks to equip the Citra Group of Companies with the requisite
knowledge and insights to navigate the currency markets adeptly and capitalize on emerging
opportunities. This data analysis project aims to provide a comprehensive understanding of how
the COVID-19 pandemic and geopolitical factors have influenced the exchange rates of CAD
and AUD relative to RM. By employing numerical descriptive analysis and graphed descriptive
analysis, we will uncover insights crucial for decision-making regarding potential investments in
Canada and Australia. Through this analysis, the Citra Group of Companies will be equipped
with valuable information to make informed investment decisions in the selected countries.

4. Data Analysis Methodology

There are several data analysis methodologies,such as Descriptive analysis - What happened,
Exploratory analysis - How to explore data relationships, Diagnostic analysis - Why it happened,
Predictive analysis - What will happen, Prescriptive analysis - How will it happen. Data analysis
methods can be divided into two big categories: quantitative and qualitative.In this study we will
explore based on the data analysis methods we learned in lecture notes. The following is an
explanation of the methods we will use.
4.1 Numerical Descriptive Analysis
4.1.1 Frequency analysis
1) Frequency distribution
Exchange rate data are arranged chronologically and grouped according to different national
currencies. Thus, the frequency distribution histogram can be drawn. By observing the frequency
distribution histogram, we can identify the main features of exchange rate data, such as central
tendency, fluctuation range and distribution pattern.

2) Cumulative Frequency Distribution

By comparing the cumulative frequency plots of Australia and Canada between 2018 and 2024,
it is possible to find out whether their exchange rate distributions are similar or different. It is
possible to analyze the cumulative frequency distribution for different years and observe the
stability and volatility of the exchange rate data, as well as possible trends.

4.1.2 Measures of Central Tendency

1) Mean Arithmetic
The exchange rate data of each country are grouped according to the year, and the arithmetic
average of each year is calculated to compare the CAD and AUD each year. Observe the
exchange rate trend in different years, whether there is a significant rise, fall or fluctuation.

2) Median
For each currency, the collected exchange rate data is arranged chronologically, then the median
for each time period is calculated, comparing the median for each time period for CAD, AUD,
and MYR. Look at the trend of the median and see if there is a significant increase, decrease or
fluctuation.

3) Mode
The mode is determined by calculating how often each value appears in the exchange rate data,
and then finding the value that appears the most often. Compare the modes of CAD, AUD and
MYR. Observe the changing trend of the mode.
4.1.3 Measures of Dispersion
To use Measures of Dispersion to analyze the currency exchange rate patterns of CAD, AUD and
MYR from 1 February 2018 to 28 February 2024, there are two methods we will use:

1) Quartile
We can divide the data into 4 equal parts by obtaining the Quartile value:
Q1 (First Quartile): is a value in the 25% position
Q2 (Second or Median Quartile): ranked 50%
Q3 (Third Quartile): ranked 75%
Quartiles can help understand the distribution of exchange rate data, including the middle 50%
range (IQR) of the data and the likelihood of outliers.

2) Percentile
Divide the data into 100 equal parts
Percentage displays values that are below a specific percentage of the data in the dataset in which
it is found. (10%,20%,30%......90%)
Percentiles find exchange rate values at specific percentages, helping to understand the
distribution of data and the likelihood of extreme values.

4.1.4 Measures of Variability

To use Measures of Variability to analyze the currency exchange rate patterns of CAD, AUD and
MYR from 1 February 2018 to 28 February 2024, we will proceed in the following five steps：

1) Range
We calculate the difference between the maximum and minimum values of the exchange rate
data for each currency. This will give you the range of fluctuations in the exchange rate over the
entire time period.

2) Interquartile Range
Calculate the difference between the third quartile (Q3) and the first quartile (Q1) of exchange
rate data for each currency. This will calculate the fluctuations in the middle 50% of the data.But
this range does not take into account all given data and this range also does not provide an
overview of the degree of density and overall.

3) Standard Deviation
Gives an overview of data density from its Mean.Calculate the standard deviation of exchange
rate data for each currency, a common way to measure the extent of exchange rate volatility. The
larger the standard deviation, the greater the exchange rate volatility.

4) Variance
Variance is obtained by doubling the two standard deviations. Variance is more commonly used
as a scattering measure when compared to standard deviation. Calculate the variance of the
exchange rate data for each currency, which is the square of the standard deviation. Variance
provides a measure of how spread out the data is, with larger values indicating more spread out
data.

5) Coefficient of Variation
When two samples have the same unit of measurement, Variance and Standard Deviation can be
compared with each other in terms of their data dispersion. However, if there are two standard
deviation measurements that are not in the same unit, then comparisons cannot be
made.Calculate the coefficient of variation, the ratio of the standard deviation to the mean,
usually expressed as a percentage, for each currency's exchange rate data. This allows
comparison of the relative extent of exchange rate fluctuations of different currencies because it
normalizes the standard deviation to the mean.

4.2 Graphic Descriptive Analysis

In the process of Performing Numerical Descriptive Analysis, we will conduct line and bar
charts to analyze the currency exchange rate patterns of CAD, AUD and MYR from 1 February
2018 to 28 February 2024.

4.2.1 line chart

The line chart can clearly show the changing trends of the Canadian dollar, Australian dollar and
Malaysian ringgit respectively, and understand the relative strength and long-term trends
between these currencies.The line chart can compare the exchange rate changes of the Canadian
dollar, Australian dollar and Malaysian ringgit in the same chart, which is helpful to observe the
relationship and differences between them.Based on past exchange rate data, the line chart can
help predict the future trend of the Canadian dollar, Australian dollar and Malaysian ringgit
exchange rates, which has guiding significance for investment and decision-making.

4.2.1 bar chart

Histograms are great for analyzing seasonal changes, and if there are seasonal fluctuations,
histograms can help identify these changes so that appropriate strategies can be developed.
Especially during the covid-19 epidemic, it can help us clearly analyze the impact of the different
severity of the epidemic on the exchange rate in different seasons.
Histograms have intuitive visual effects, are easy to understand and compare, and are suitable for
displaying data changes over a long period of time. We are going to analyze the data content for
five years, and use histograms to visually display the changes in the data.

5. Summary

To explore the impact of the COVID-19 pandemic and geopolitics on world currencies, we
selected Canada and Australia as examples for data analysis. The data is based on the exchange
rate data of the two countries from February 1, 2018 to February 28, 2024, obtained from the
official website of Bank Negara Malaysia. Combining the research purpose of exploring the
Impact of the epidemic and geopolitics on the world currency, we summarized four objectives of
Data Analysis, including Disclosing External Factors' Impact, Identifying Trends and
Fluctuations, Assessing Risk and Volatility, Informing Investment Decisions, in order to more
accurately and comprehensively think about research issues, A variety of data analysis methods
are combined, such as numerical descriptive analysis and central tendency, dispersion,
variability, and graph descriptive analysis. By using a variety of data analysis methods, it is not
only convenient to quickly find the main features of the data, but also to reveal the characteristics
and rules of the data from different angles. Secondly, different data analysis methods highlight
different data characteristics, and the analysis is more comprehensive. In addition, due to the use
of more data, in order to avoid the consequences of data analysis errors, different methods can
sometimes verify each other to improve accuracy.

6. Copy of Project Secondary Data in the form of Google Drive folder LINK

Copy of Project Secondary Data：

https://drive.google.com/file/d/1Y_AN8sm8Stgmpr_tj2rbLbQRJQPSW5G7/view?usp=drivesdk
Google drive :
https://drive.google.com/drive/folders/1ok0dI8PxSMmpicG9QIDDkItt29uBXRgX

7. Reference

Bank Negara Malaysia. (2022). BNM - Exchange Rates - Bank Negara Malaysia.

Www.bnm.gov.my. https://www.bnm.gov.my/exchange-rates

8. Gantt Chart & Milestone

https://docs.google.com/spreadsheets/d/1RZbHlyC2NXaVUYECaNs5jqUBBcvvLNP5IfnzrQVt
_zs/edit?usp=sharing