Currency Basket

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DEFINITION of 'Currency Basket'

A selected group of currencies in which the weighted average is used as a measure of the value or the amount of an obligation. A currency basket functions as a benchmark for regional currency movements - its composition and weighting depends on its purpose.

BREAKING DOWN 'Currency Basket'

A currency basket is commonly used in contracts as a way of avoiding (or minimizing) the risk of currency fluctuations. The European currency unit (which was replaced by the euro) and the Asian currency unit are examples of currency baskets.

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RELATED FAQS
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  3. Where did the term 'pip' in currency exchange come from?

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  4. How do changes in national interest rates affect a currency's value and exchange ...

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