Linkage between Ringgit exchange rate and U.S Dollar

Abstract

Malaysia, the movement of its currency rate i.e. Ringgit as against to US dollar are unpredictable and unregulated. Therefore, this causes some difficulty to appreciate the movement of macroeconomic analysis and market surveillance purposes. In 1965, Chaos theory was introduced, and it focused on behaviour and condition of dynamical systems. Chaotic behaviour involves the sequence of produced data in forecasting future performance, which is the cause of gaining unpredictable and random data. Nonetheless, while it is possible to present data by fixed order and mathematical formula, it is also possible that applications from various fields may contribute as a factor that affecting the movement of currency. This article investigates the behaviour of Ringgit movement as against to US dollar and result shows that Ringgit possess a chaotic behaviour in its currency movement.

Keywords: chaos theory; chaotic behaviour; non-linear model; fixed exchange rate; floating exchange rate