# Advancing Exchange Rate Forecasting: Leveraging Machine Learning and AI for Enhanced Accuracy in Global Financial Markets

arXiv: https://arxiv.org/abs/2506.09851 · HTML: https://mlsanity.com/paper/2506.09851/

## Key facts

- Cited by 2 papers in the map (data through 14 Oct 2026).
- Builds on 4 of its 35 references that are in the map.
- First posted on arXiv 11 Jun 2025.

## Builds on (most cited first, 4 of 4)

- [Attention Is All You Need](https://mlsanity.com/paper/1706.03762/) (2017)
- [IMVB7t: A Multi-Modal Model for Food Preferences based on Artificially Produced Traits](https://mlsanity.com/paper/2412.16807/) (2024)
- [Privacy Preserving Machine Learning Model Personalization through Federated Personalized Learning](https://mlsanity.com/paper/2505.01788/) (2025)
- [Multimodal Programming in Computer Science with Interactive Assistance Powered by Large Language Model](https://mlsanity.com/paper/2503.06552/) (2025)

## Built on by (most cited first, 2 of 2)

- [ViMoNet: A Multimodal Vision-Language Framework for Human Behavior Understanding from Motion and Video](https://mlsanity.com/paper/2508.09818/) (2025)
- [GANDiff FR: Hybrid GAN Diffusion Synthesis for Causal Bias Attribution in Face Recognition](https://mlsanity.com/paper/2508.11334/) (2025)

## Abstract (arXiv)

The prediction of foreign exchange rates, such as the US Dollar (USD) to Bangladeshi Taka (BDT), plays a pivotal role in global financial markets, influencing trade, investments, and economic stability. This study leverages historical USD/BDT exchange rate data from 2018 to 2023, sourced from Yahoo Finance, to develop advanced machine learning models for accurate forecasting. A Long Short-Term Memory (LSTM) neural network is employed, achieving an exceptional accuracy of 99.449%, a Root Mean Square Error (RMSE) of 0.9858, and a test loss of 0.8523, significantly outperforming traditional methods like ARIMA (RMSE 1.342). Additionally, a Gradient Boosting Classifier (GBC) is applied for directional prediction, with backtesting on a 10,000 initial capital revealing a 40.82% profitable trade rate, though resulting in a net loss of 20,653.25 over 49 trades. The study analyzes historical trends, showing a decline in BDT/USD rates from 0.012 to 0.009, and incorporates normalized daily returns to capture volatility. These findings highlight the potential of deep learning in forex forecasting, offering traders and policymakers robust tools to mitigate risks. Future work could integrate sentiment analysis and real-time economic indicators to further enhance model adaptability in volatile markets.