Oleysank/kenya-exchange-analysis

# Kenya Exchange Rate Forensics (USD/KES) ## 1. Executive Summary This project analyzes 5 years of USD/KES exchange rate data (2021-2026) to identify long-term structural trends and short-term market instability. By applying Time-Series smoothing and rolling volatility metrics, we isolate the economic "signal" from daily market "noise." ## 2. Data Integrity & Wrangling * **Temporal Continuity:** Unlike cross-sectional data, time-series requires strict chronological flow. Missing values (gaps) were handled using **Forward Filling (LOCF)** to preserve the most recent market equilibrium. * **Dataset:** 1,825 daily observations with integrated synthetic shocks to test model resilience. ## 3. Statistical Methodology * **Smoothing:** Used a 30-Day Simple Moving Average (SMA) to identify the "Price Momentum." This filters out stochastic daily fluctuations that can mislead short-term analysis. * **Volatility Analysis:** Implemented a Rolling Standard Deviation (30-day window) to quantify market "fear" and instability spikes. ## 4. Key Findings * **Depreciation Drift:** The Shilling exhibits a strong upward drift (Non-Stationarity), moving from 110 to ~180 KES/USD over the study period. * **Volatility Spikes:** Analysis identified major "purple spikes" in volatility (exceeding 2.0 SD), indicating periods where the rate was moving unpredictably regardless of the overall trend.