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Currency basket
Financial portfolio / From Wikipedia, the free encyclopedia
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A currency basket is a portfolio of selected currencies with different weightings.[1] A currency basket is commonly used by investors to minimize the risk of currency fluctuations[2] and also governments when setting the market value of a country's currency.[3]
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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.[4] Another example is the special drawing rights of the International Monetary Fund.[5][6]
A well-known measure is the U.S. 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]