Exploring currency exchange dynamics from a complex network perspective

We analyze the fluctuations of 166 global currencies relative to the Euro over the period 2006-2018. Our analysis of the increases and decreases in average global currency values towards the Euro reveals the approximately 8 year long European recession, with a periodic rise-and-fall characteristic between 2007-2018, with low points of the Euro currency in 2010, 2012, and 2015. Furthermore, we enhance our analysis by creating currency fluctuation networks, for each year, based on the idea that two currencies, with similar evolution towards the Euro, are linked in a weighted undirected graph. Analyzing the obtained graphs (one for each yearly transition, i.e., 20062007 to 2017-2018), we find that the network modularity and average path length are highly correlated (r = 92.18% and r = 88.25%, respectively) with the actual average currency fluctuation over the respective period. Our results suggest that network modeling of currency fluctuations reveals underlying properties of the economic landscape, and could be used to enhance our understanding of the complex economic system.