Refers to a foreign currency PORTFOLIO as a reference. The proportion of a foreign currency in the portfolio is usually based on the importance of the foreign currency in the country’s international trade. It is a group of currencies consisting of a variety of currencies in a certain proportion.
The number of currencies in the basket is fixed and changes only when the weights are adjusted.
Determining the weights is only one part of building a basket.
The purpose is to determine the quantity of a basket of currencies.
In operation, the weights vary with the market exchange rate.
A basket of currencies is a composite currency formed by combining groups of existing currencies in some way.
A basket of currencies is not a real currency, but a unit of account and a valuation standard.
Some countries use it for exchange rate management, for example by pegging their currencies to an existing or constructed basket of currencies, or referring to a basket of currencies in ET constant exchange rate management.
