Tuesday, November 12, 2019

Currency Indexes

The Currency Index widget for websites offers a view of the general trends on the currency market. It tracks the performance of each of the chosen currencies against a basket of its most liquid peers by aggregating the moves of its exchange rates into easy-to-understand Forex indexes. Thus each index represents a string of average changes of the rates compared to the closing prices for a fixed base date. These changes, or returns, are expressed in percentages, with the values of the index on the base day set to 100%. Consequently, a value below 100% implies a decrease relative to the base date, and a value above 100% shows a rise.

The currencies available in the widget are the Euro (EUR), the Pound (GBP), the Swiss Franc (CHF), the US Dollar (USD), and the Yen (JPY). The pairs used in calculations of a specific index always contain the corresponding currency as the base currency, even if the standard notation has it listed second. Thus an increase in the index always points to the strengthening of the currency against its peers, while a decrease indicates a weakening.