The Prediction of Currency Crisis in Iran Economy Using the Signaling Approach

Currency crisis is one kin of financial crises and has caused devastating impacts on the various sectors of affected economies. In this paper the signaling approach is usedto identify the leading indicators of currency crisis in Iran’s economy with the use of seasonal data in the time period of 1367 to 1390. Based on the result of this paper themost important effective factors on crisis prediction, organized according to the lowest ratio of noise to signal include: Added value of manufacturing and miningsector, Annual Growth Rate of GDP, Annual Growth Rate of government debt to central bank/GDP, Annual Growth Rate of liquidity to International Reserves, AnnualGrowth Rate of International Reserves. The result of the study shows that signaling model with the approach of single country is successful in the prediction of allcurrency crisis which takes place in Iran’s economy.

Keywords:

Currency Crisis , Signaling Model , Forecasting Indicators , Growth Rate of GDP