Nexus between COVID-19, temperature and exchange rate in Wuhan City: New findings from Partial and Multiple Wavelet Coherence

Iqbal, Najaf; Fareed, Zeeshan; Shahzad, Farrukh; He, Xin; Shahzad, Umer; Lina, Ma

Abstract This study attempts to document the nexus between weather, covid-19 outbreak in Wuhan and the Chinese economy. We employ 24-h daily average temperature, daily new confirmed cases of a covid-19 in Wuhan, and RMB exchange rate to represent the weather, covid-19 outbreak, and Chinese economy, respectively. The methodology of Wavelet Transform Coherence (WTC), Partial Wavelet Coherence (PWC), and Multiple Wavelet Coherence (MWC) is used to analyze the daily data collected from 21st January 2020 to 31st March 2020. Results reveal significant coherence between series at different time-frequency combinations. Overall results show the insignificance of an increase in temperature to contain new covid-19 infections. The Renminbi exchange rate showed a negative coherence at specific time-frequency spots suggesting a negative but limited impact of the covid-19 outbreak in Wuhan on the Chinese export economy. Our results are contrary to many earlier studies, which show a significant impact of increased temperature in slowing down covid-19 spread. These results can have important implications for economic and containment policy making regarding the covid-19 outbreak.