The Dow Jones Euro Currency Index was created as a benchmark of the euro’s performance in the context of the global economy. The index measures changes in the value of the euro by tracking its exchange rates against 10 currencies: the U.S. dollar; the Japanese yen; the British pound; the Swiss franc; the Russian ruble; the Swedish krona; the Korean won; the Canadian dollar; the Taiwan dollar; and the Australian dollar.
The Dow Jones Euro Currency 5 Index is a subset of the Dow Jones Euro Currency Index and is designed to be the basis of financial products such as listed futures and options contracts, as well as over-the-counter swaps and structured products. The index measures the value of the euro against the five most liquid currencies: the U.S. dollar, the Japanese yen, the British pound, the Swiss franc, and the Australian dollar.
“With these innovative indexes, Dow Jones Indexes extends coverage to the currency asset class for the first time with a focus on the euro, which has become the second most heavily traded currency in the world in just five-and-a-half years of its existence,” said Michael Petronella, president, Dow Jones Indexes/Ventures. “The indexes can be used by international portfolio managers and traders as an effective aid in hedging currency risk in their euro-denominated investments. The investable Dow Jones Euro Currency 5 Index enhances that utility with a basket of the world’s most liquid currencies.”
The Dow Jones Euro Currency Index and the Dow Jones Euro Currency 5 Index are economically weighted. They are the first indexes to select and weigh currency components with three factors: bilateral trade with the Euro zone (40%), money supply as defined by M2 (40%) and Gross Domestic Product (20%). Both the Dow Jones Euro Currency Index and the Dow Jones Euro Currency 5 Index are calculated in real time using foreign-exchange rates from Reuters.
The Dow Jones Euro Currency Index and the Dow Jones Euro Currency 5 Index are reviewed annually in March. History for both indexes is available back to Dec. 31, 1998, with a base value of 100. The components, weightings and daily closing values of the Dow Jones Euro Currency Index and the Dow Jones Euro Currency 5 Index are available on www.djindexes.com.
