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Currency Basket

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Currency basket
The value of a portfolio of specific amounts of individual currencies, used as the basis for setting the market value of another currency. It is also referred to as a currency cocktail.

Currency Basket
A portfolio of several currencies with different weightings. For example, one may construct a currency basket with 40% euros, 35% U.S. dollars, and 25% British pounds; the percentages determine the basket's value. Using a currency basket is a common way to peg a currency without overexposing it to the fluctuations of a single currency. For example, Kuwait shifted the peg of the Kuwaiti dinar to a currency basket from the U.S. dollar in 2007 because the dollar was weak at the time, resulting in high inflation.


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dollar in the course of moving from a dollar peg to a currency basket peg.
The ECU is a currency basket whose value is based on the currencies of the eleven euro participants, as well as the Danish krone, the Greek drachma, and the British pound sterling, whose issuers will not initially be among the euro group.
Elsewhere, the euro received a lift from the Russian Central Bank's decision to raise the weighting of euros in its dual currency basket.
 
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