Forecasting foreign exchange rate is very essential to the international trade. Foreign investors and traders predict exchange rates to determine the profits and risks of an investment. However, the trends in exchange rate market looks random. A theory on chaos states that although a behavior may seem random, there is an underlying deterministic relationship between dynamical systems. Thus, this research attempts to test for the existence of chaos in the Philippine Foreign Exchange Market using the Largest Lyapunov Exponent (LLE) Test and 0-1 Test. The results of the Lyapunov Exponent test show that there is a general lack of chaos in the exchange rate series. This is further verified using the 0-1 Test, wherein no values are close to 1. In general, the Philippine foreign exchange market is not chaotic. Hence, the Philippine foreign exchange rates cannot be predicted.
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