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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.
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Investopedia explains '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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Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.
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Find out how fledgling economies can find some stability in their currency and attract foreign investment.
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This strategy can provide returns even if the currency pair doesn't move a cent.
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