Trade weighted index

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The Trade Weighted Index is an economic instrument used by economies to compare their exchange rate against those of their major trading partners. Those trading partners that constitute a larger portion of an economy's exports and imports receives a higher index. The point of the trade weighted index is to make a complete comparison between one economy's currency and other currencies it interacts with. It is a much more comprehensive analysis than comparing two currencies, such as the Australian and the US dollar.

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