what is the concept of basket of currency?
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This entry was posted on Wednesday, May 28th, 2008 at 7:56 am and is filed under Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
May 28th, 2008 at 7:56 am
Instead to taking into account only one currency for some calculations, several ones are used.
The simple average can be used, or a weighted average, where every currency has a different influence on the result.
For example, if you want to reflect the change of the dollar value in front of the country exports, you could use a basket of the currencies of the main exports markets, weighted by their share of total exports.
This is not wright nor wrong by itself. It depends from what you will do with the average.