Modern day Applied Scientific research; Vol. six, No . eleven; 2012 ISSN 1913-1844 E-ISSN 1913-1852 Published by Canadian Center of Science and Education
Network Topology of Foreign Exchange Rate
Shamshuritawati Sharif1, 2, Wirklich Syahidah Yusoff1, 3 & Maman A. Djauhari1 1 2 several
Faculty of Science, Universiti Teknologi Malaysia, Skudai, Johor, Malaysia School Arts and Science, Universiti Utara Malaysia, Sintok, Kedah, Malaysia Teachers of Industrial Sciences & Technology, Universiti Malaysia Pahang, Gambang, Pahang, Malaysia
Correspondence: Shamshuritawati Sharif, Faculty of Technology, Universiti Teknologi Malaysia, Skudai, Johor, Malaysia; College Artistry and Technology, Universiti Utara Malaysia, Sintok, Kedah, Malaysia. E-mail: [email protected] com Received: October a few, 2012 doi: 10. 5539/mas. v6n11p35 Fuzy In this conventional paper we use a network topology approach to analyze the interrelationship of fifty five world values which is depending on correlation examination. With this point of watch, those human relationships can be assessed by a relationship structure among currencies. To analyse that network, we all filter the key information contained in it by using bare minimum spanning shrub, and we understand it by using a centrality procedures. This topology will offers us a useful guide to appreciate their behaviour and to identify the prominence currency inside the network within a complex network. The outcomes show that HKD-Hong Kong Dollar is the most dominance currencies, followed by in order of importance; SGD-Singapore Dollar, USD-US Dollar, SAR-Saudi Riyal, and TWD-New Taiwan Dollar. Keywords: adjacency matrix, complex system, correlation matrix, distance matrix 1 . Introduction A foreign currency such as Malaysian ringgit, ALL OF US dollar, British pound sterling, etc ., works extremely well for obligations transaction inside country. In just about any country whose residents perform business overseas or take part in financial deals with residents in other countries, they want for an exchange of 1 currency to a different currency, so that payments could be made in an application acceptable to foreigners. The exchange rates have direct influence about all other market segments because the selling price of any asset is expressed when it comes to a forex (GГіrski ain al., 2008). A value of currency can be expected to indicate the whole financial status from the country, and foreign exchange level is considered to be way of measuring economic equilibrium of the two countries (Mizuno et 's., 2006). Curiously, a currency exchange rate produces a complex system. Their complicated interrelationships are in terms of price fluctuations, and their number of values. Usually, these interrelationships may be represented by correlation research among the logarithmic of values price returns. To filter the important information contained in this kind of complex system, Mantegna presents the use of a nominal spanning tree (MST) in 1999. Since then, MST is widespread in many areas in financial market such as foreign exchange rate; Mizuno et approach. (2006), KwapieЕ„ et 's. (2009), GГіrski et ing. (2008), and Jang ain al. (2011), while in stock market; Tabak et approach. (2010) and MiccichГЁ et al. (2003), and Onnela et ing. (2003) in portfolio analysis. Based on MST, a blocked network topology which consists of important information may be constructed. Furthermore, the function of importance of every particular currency can be stated by the use of centrality measure. Consequently , to demonstrate the position of this evaluate, in this paper we perform a study on the 55 world currency exchange rate. For that purpose, those foreign currency will be considered as a complex program consisting of fifty-five currencies while nodes linked by 5.[55-1]/2=1485 links every single of which compares to the correlation coefficient among two distinct nodes. The remaining of the paper is structured as follows. We all briefly review on MST in the next section, followed by the currency exchange rate data in Section a few. In Section 4 and Section a few, we talk about on the research strategy and analysis results, respectively. Later, in the last...