Running a Dickey Fuller test, I've determined the the nominal effective exchange rate (NEER) is non-stationary. However, the difference of the NEER is stationary by the Dickey-Fuller test. The ACF of the NEER (not differenced) was very slowly decaying, providing more support that the NEER isn't stationary. So I'd like to fit an ARIMA model to the differenced NEER data.
I am unsure of what to deduce from these images. The ACF shows a strong bar in the first lag, then another bar in the significance region at the second lag, then there's a few that show up as significant later on but its mostly insignificant. The PCAF shows a strong bar in the first lag, then a few more significant bars periodically.
Is there something I'm missing or need to take into account. Can I proceed with fitting various ARIMA models?
Thanks for the help!