NEW YORK (HedgeWorld.com)–Dow Jones Indexes today debuted the Dow Jones Euro Currency Index and the Dow Jones Euro Currency 5 Index, which both track the value of the euro.
The Dow Jones Euro Currency Index benchmarks the euro’s performance in the context of the global economy, and tracks its exchange rates against 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.
A subset of the Dow Jones Euro Currency Index, the Dow Jones Euro Currency 5 Index aims to act as the basis of financial products such as listed futures and options contracts, as well as over-the-counter swaps and structured products. It measures the euro’s value against the most liquid currencies, including the U.S. dollar, the Japanese yen, the British pound, the Swiss franc and the Australian dollar.
Noting that the euro has become the second most heavily traded currency in the world five and a half years after its creation, Dow Jones Indexes/Ventures President Michael Petronella said in a statement, “the indexes can be used by international portfolio managers and traders as an effective aid in hedging currency risk in their euro-denominated investments.”
Both indexes are economically weighted and calculated in real time using foreign exchange rates from Reuters.* According to Dow Jones, they are also the first indexes to select and weigh currency components by bilateral trade with the Euro zone (40%), money supply as defined by M2 (40%) and gross domestic product (20%).
The new indexes are set to be reviewed annually in March, and history for both indexes is available as far back as Dec. 31, 1998, with a base value of 100. Components, weightings and daily closing values will be found at www.djindexes.com.
In July, Dow Jones Indexes partnered with AIG Financial Products Corp to create the Dow Jones-AIG Commodity Index Euro and the Dow Jones-AIG Commodity Index Yen, as well as three sub-indexes.
*Reuters is the parent company of Lipper HedgeWorld.
Contact Bob Keane with questions or comments at firstname.lastname@example.org.