This projects aims to analyze the patterns of currency flactuations in developing countries (Somalia and Afghanistan) since 1960. Through which I am hopeful to relate and correlate factors from inside and outside of the market in Afghanistan and Somalia. The countries have suffered from several political and economical disasters during the mentioned period. Through correlating these facotrs with inner-market changes, this project will determine whether and how impactful the factors have been in causing changes in the currency rate.

Based on a study done by Fartun Ahmed at Simad University on factors that contribute to the changes in exchange rate he has discovered that Macroeconomic factors such as Trade balance, GDP, and inflation contribute the most. However, besides that what contributes to changes in exchange rate in countries like Somalia and Afghanistan is the political state they are in.

The datasets I have used are from the sources below: Monthly currency exchange rate estimates by market, information on model, for dataset version 2024-03-26 WorldBank WorldBank Currency Rate. Inflation, and GDP Datasets WorldBank quarterly-edited Data.World

Upon cleaning the data found on currency rate, GDP, and inflation, the relationship between the three were correlated and it was found that a country's (Deriven based on Afghanistan and Somalia) GDP and inflation have an indirect relationship with its currency rate. As the two mentioned factors rise, the currency rate in that country falls. Moreover, upon further researches done for relationship of currency rate with the political state of the two countries, I could find valuable insight on how and when the currency rate usually changes. For instance, Somalia had a pretty stable political state from 1960 till 1980 at which period the currency rate for the country has a stable linear graph. However, after the crisis begins, from 1981 the currency rate takes a huge change, the rate falls from 6 to 490 in just a decade. Similarly, Afghanistan's currency takes a huge fall after the fall of the republic in Q4 of 2021. The currency goes up to 105 from 77 in just a quarter of the year.

Work in progress... Afghanistan Currency Rate has not yet been correalted with related political events yet.