A currency basket is a portfolio of selected currencies with different weightings, used to measure the value of another currency or to manage exchange rate risk. Examples include the US Dollar Index (DXY), which measures the dollar against six major currencies, and the IMF's Special Drawing Rights (SDR). Currency baskets help smooth out fluctuations from any single currency and provide a more stable reference point for valuation.
Example
“The US Dollar Index (DXY) measures the value of the dollar against a basket of six major currencies — the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc — with the euro holding the largest weighting at 57.6%.”