What Is US Dollar Index? The US Dollar Index is used to measure the value of the dollar against a basket of six foreign currencies. Let's take a closer look.
What Is US Dollar Index?
A measure of the US dollar's value in relation to a basket of foreign currencies is the US dollar index (USDX). After the Bretton Woods Agreement was dissolved in 1973, the US Federal Reserve created the USDX. It is now maintained by ICE Data Indices, a subsidiary of the Intercontinental Exchange (ICE).
Despite the fact that the six currencies represented by the USDX are frequently referred to as America's most important trading partners, the index has only been changed once, in 1999, when the euro replaced the German mark, French franc, Italian lira, Dutch guilder, and Belgian franc. As a result, the index is not a reliable indicator of current US trade.
How To Calculate The USDX Index Price?
The USDX is based on a basket of six currencies with different weightings (see above). The index calculation is simply the weighted average of the US dollar exchange rates against these currencies, normalized by an indexing factor (which is ~50.1435)
USDX = 50.14348112 × EURUSD^-0.576 × USDJPY^0.136 × GBPUSD^-0.119 × USDCAD^0.091 × USDSEK^0.042 × USDCHF^0.036
What Is US Dollar Index? How To Calculate the USDX Index Price? - Hopefully, this article can help you to get some knowledge.
