WM/Reuters FX Benchmark is an international standard used in the financial industry to assess currency values. It is a reference exchange rate used in financial transactions worldwide.
How WM/Reuters FX Benchmark Works:
- Data Source: WM/Reuters FX Benchmark relies on data provided by Thomson Reuters and State Street Corp., which gather information on currency exchange rates from various sources worldwide.
- Selection of Rates: A set of currency exchange rates is chosen based on transactions in the interbank market and transactions executed by clients of financial institutions over a specified period of time.
- Calculation of Average: Based on the collected data, the average exchange rate value for a given currency pair is calculated. The calculation process is performed daily and takes into account different time zones to capture transactions worldwide.
- Publication of Results: The results are published in real-time and made available to financial institutions and market participants who use this information for portfolio valuation, trading, and risk assessment.
Application of WM/Reuters FX Benchmark:
- Financial Transactions: WM/Reuters FX Benchmark is used as a reference exchange rate in financial transactions such as currency trades, currency options, and forward contracts.
- Portfolio Valuation: Investors use WM/Reuters FX Benchmark to value their investment portfolios containing currencies from different countries.
- Risk Assessment: Financial institutions utilize WM/Reuters FX Benchmark to assess currency exchange rate risk and manage it effectively.
WM/Reuters FX Benchmark is considered a reliable source of currency exchange rate information and is a key component of the global financial system.
