THe currency basket is the term used to describe the different currencies, with varying weightings. It is used to establish the market value of another currency through pegging.

Currency baskets are portfolios of currencies with different weightings. Investors and governments use a currency basket to minimize the risk of currency fluctuations.

A currency basket is a portfolio of selected currencies with different weightings, used to measure the value of a currency or asset relative to a group of other currencies. It helps reduce risk by diversifying exposure to exchange rate fluctuations. For example, the Special Drawing Rights (SDR) by the IMF is a well-known currency basket comprising the US dollar, euro, Chinese yuan, Japanese yen, and British pound. Central banks and investors use currency baskets to stabilize exchange rates, manage foreign reserves, or hedge against currency risk. By tracking a basket, they can mitigate the impact of volatility in any single currency, ensuring more balanced financial outcomes.