What is a currency basket?

A currency basket is a method of comparing the average exchange rate against other world currencies. We have included its description in the “Forex Terms” section, as this is important for assessing the real value of the selected monetary unit.  

A currency basket is a list of currencies, which is fundamental for the bodies determining the movement of the national currency in relation to other exchange rates.

It is necessary to use a currency basket due to the instability of exchange rates of various monetary units.

When determining the currency basket, information about the country’s part in the joint total national product, foreign trade circulation of a certain group of countries is used as a balance.

The currency basket is in constant motion, it is always adjusted in response to shifts in the relations of the external economy and changes in relations in the monetary and financial sphere.

That is, the instrument in the International Monetary Fund is special matching rights, which allow the creation of foreign exchange reserves, based on an international agreement, in order to prevent the danger of a permanent shortage of foreign exchange reserves.

The currency basket is used in the creation of an international artificial currency unit, currency indexing and credit currency in international relations and in the determination of monetary national units. Thanks to this concept, the impact of economic movements on the purchasing power of money is more accurately determined.

In Europe, the unit of account is the EURO - this is the basis of the monetary system, it is calculated according to the currency baskets of states that are members of the EEC.
When determining the share of one currency, the basis is the part of the country’s industrial production in the total volume of industrial production of the EEC members. In use, the currency basket allows you to reduce the degree of impact of currency probabilities, since the cost of definitions contains a summarized indicator.