Key Currency

Dictionary Says

Definition of 'Key Currency'

The currency used as a reference in an international transaction or when setting an exchange rate. The key currency used is usually issued by a stable, developed country such as the United States. Central banks also hold key currencies in reserve (reserve currency).  
Investopedia Says

Investopedia explains 'Key Currency'

As a monetary practice, countries with smaller or less-dominant economies sometimes align their exchange rates with the dominant trading partner. The central bank of some developing countries may fix the exchange rate to the key currency, which has the effect of limiting monetary policy flexibility but can also increase confidence in the country's economy.  

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Major Pairs

    The four forex ...
  2. Forex - FX

    The market in ...
  3. Group Of Seven - G-7

    A forum of the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for ...
  5. Reserve Currency

    A foreign ...
  6. Monetary Policy

    The actions of a ...
  7. Central Bank

    The entity ...
  8. Paris Pair

    The nickname for ...
  9. Currency Pair

    The quotation ...
  10. Base Currency

    The first ...

Articles Of Interest

  1. Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.
  2. The Currency Board: Understanding The Government's Bank

    Currency board, central bank - what's the difference? Find out more about this little-known monetary authority.
  3. 6 Factors That Influence Exchange Rates

    Find out how a currency's relative value reflects a country's economic health and impacts your investment returns.
  4. Global Trade And The Currency Market

    Learn how the Bretton Woods system got the ball rolling for world trade.
  5. What Causes A Currency Crisis?

    Find out what can cause a currency to collapse and what central banks can do to help.
  6. A Primer On The Forex Market

    Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers.
  7. Forex Basics: Setting Up An Account

    The line between profitable forex trading and ending up in the red may be as simple as choosing the right account.
  8. An Introduction To Complementary Currencies

    There are alternatives to national currencies. Discover complementary currencies and how they work.
  9. Forex Market Sentiment Indicators

    Sentiment Indicators are another tool that can alert traders to extreme conditions.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center