Currency basket: Difference between revisions
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An example of a currency basket is the [[European Currency Unit]] that was used by the [[European Community]] member states as the [[unit of account]] before being replaced by the euro.<ref>{{cite book |title=Law of the European Union |last=Kent |first=Penelope |year=2008 |publisher=[[Pearson Education]] |isbn=978-1-4058-3526-8 |page=258 |url=https://books.google.com/books?id=1OcCS_czyroC&pg=PA258 |access-date=19 September 2010}}</ref> Another example is the [[special drawing rights]] of the [[International Monetary Fund]].<ref>{{Cite web|title=Factsheet -- Review of the Special Drawing Right (SDR) Currency Basket|url=https://www.imf.org/external/np/exr/facts/sdrcb.htm/|website=www.imf.org|access-date=2020-05-21}}</ref><ref>{{Cite web|title=What is the IMF's currency basket?|url=https://www.weforum.org/agenda/2015/11/what-is-the-imfs-currency-basket/|website=World Economic Forum|language=en|access-date=2020-05-21}}</ref> |
An example of a currency basket is the [[European Currency Unit]] that was used by the [[European Community]] member states as the [[unit of account]] before being replaced by the euro.<ref>{{cite book |title=Law of the European Union |last=Kent |first=Penelope |year=2008 |publisher=[[Pearson Education]] |isbn=978-1-4058-3526-8 |page=258 |url=https://books.google.com/books?id=1OcCS_czyroC&pg=PA258 |access-date=19 September 2010}}</ref> Another example is the [[special drawing rights]] of the [[International Monetary Fund]].<ref>{{Cite web|title=Factsheet -- Review of the Special Drawing Right (SDR) Currency Basket|url=https://www.imf.org/external/np/exr/facts/sdrcb.htm/|website=www.imf.org|access-date=2020-05-21}}</ref><ref>{{Cite web|title=What is the IMF's currency basket?|url=https://www.weforum.org/agenda/2015/11/what-is-the-imfs-currency-basket/|website=World Economic Forum|language=en|access-date=2020-05-21}}</ref> |
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A well-known method is the [[U.S. Dollar Index|US dollar index]], which is used by [[Foreign exchange market|Forex]] traders. |
A well-known method is the [[U.S. Dollar Index|US dollar index]], which is used by [[Foreign exchange market|Forex]] traders. There are six currencies forming the index: five major currencies–[[Euro]], [[Japanese yen]], [[Pound sterling|British pound]], [[Canadian dollar]], and [[Swiss franc|Swiss Franc]]—and the [[Swedish krona]].<ref name=":0">{{Cite web|title=Currency Basket Definition|url=https://www.investopedia.com/terms/c/currencybasket.asp|last=Ganti|first=Akhilesh|website=Investopedia|language=en|access-date=2020-05-21}}</ref> |
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== How it works == |
== How it works == |
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Revision as of 21:12, 5 April 2021
A currency basket is a portfolio of selected currencies with different weightings.[1] A currency basket is commonly used to minimize the risk of currency fluctuations.[2] Another purpose is setting the market value of a currency.[3]
An example of a currency basket is the European Currency Unit that was used by the European Community member states as the unit of account before being replaced by the euro.[4] Another example is the special drawing rights of the International Monetary Fund.[5][6]
A well-known method is the US dollar index, which is used by Forex traders. There are six currencies forming the index: five major currencies–Euro, Japanese yen, British pound, Canadian dollar, and Swiss Franc—and the Swedish krona.[7]
Wie es funktioniert
The currency basket can be used to avoid high currency volatility.[7] Forex trading is based on the opposition of one currency against another. Thus, a big jump of either currency can create unpleasant circumstances for the trader. If a Forex investor chooses to trade the USD against many other currencies, they should use the US dollar index. Traders can compose their own baskets with different weights and apply them to any trading strategy.[7]
See also
References
- ^ "currency basket". Oxford Reference. Retrieved May 21, 2020.
- ^ "Currency Basket". Investopedia. Retrieved September 18, 2010.
- ^ "Currency basket". TheFreeDictionary.com. Retrieved May 21, 2020.
- ^ Kent, Penelope (2008). Law of the European Union. Pearson Education. p. 258. ISBN 978-1-4058-3526-8. Retrieved September 19, 2010.
- ^ "Factsheet -- Review of the Special Drawing Right (SDR) Currency Basket". www.imf.org. Retrieved May 21, 2020.
- ^ "What is the IMF's currency basket?". World Economic Forum. Retrieved May 21, 2020.
- ^ a b c Ganti, Akhilesh. "Currency Basket Definition". Investopedia. Retrieved May 21, 2020.
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