TOPOGRAPHY OF THE EUROPEAN FOREIGN EXCHANGE MARKET IN 2015-2017 BY USING MINIMUM SPANNING TREE

• Main Author: RIZQY NURZAMAN (NIM : 10214096), IKHWAN
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/27957
• Institution: Institut Teknologi Bandung

On June 23rd, 2018 UK held a referendum to decide whether UK should leave or stay in the European Union. The result of referendum was 51,9% of the voter decide to leave the EU. This event became one of the historic event in Europe known as British Exit (Brexit). UK withdrawal from EU give a huge impact to UK and Europe especially related to economic stability. Economic behavior in Europe can observed by observing European foreign exchange market. Foreign exchange market is the largest market in the world with transaction value reaching billion dollars per day. <br /> <br /> Foreign exchange market has the same characteristics as complex systems. This allows foreign exchange market to be observed using physical methods like system dynamic, correlation, network and graph. In this study, will be discussed about the use of network theory for observing European foreign exchange before and after brexit. European foreign exchange network formed by using Minimum Spanning <br /> <br /> Tree. Behavior of formed network observed based on correlation coefficient which represents the relation between currencies in the network, centrality which <br /> <br /> represents the important of the currency in the network, and single-step survival rates which indicates the robustness of the network. Formed network shows that GBP have lower correlation coefficient than the others in the network. This make GBP has no strategic position in the network of European foreign exchange market. Besides that, after brexit, Euro became the currency with the highest centrality in the network.