An Investigation of the Impact of COVID-19 Non-Pharmaceutical Interventions and Economic Support Policies on Foreign Exchange Markets with Explainable AI Techniques

Lockdown measures had measurable effects on currency markets: The study found that strict lockdown policies—including stay-at-home requirements, workplace closures, travel restrictions, and internal movement limitations—all showed strong impacts on foreign exchange rates for major currencies during 2020-2021, demonstrating that public health interventions have real financial consequences that policymakers should anticipate.

Different policies affect different currencies differently: The research revealed that the impact of individual non-pharmaceutical interventions and economic support policies varied across the G10 currencies studied, suggesting that policymakers cannot assume a one-size-fits-all approach when considering how their policies might affect international financial markets and currency stability.

Explainable AI can help policymakers understand policy trade-offs: By using explainable AI techniques rather than "black box" models, the researchers made their findings interpretable and actionable, demonstrating how transparent AI methods can help governments understand the relative importance of different policy choices when balancing public health, economic, and financial stability concerns.

Combined analysis reveals complexity: This was the first study to examine the relative impact of both health interventions and economic support policies together on currency markets, suggesting that previous analyses may have missed important interactions between these different types of government responses during crises.