Posted in Finance, Accounting and Economics Terms, Total Reads: 330
Definition: Key Currency
Key currency is also called as reserve currency or anchor currency, which is set as a benchmark for setting an exchange rate during an international monetary transaction. Key currencies are an important aspect while doing a business especially international trade, which also helps in overcoming currency fluctuations.
The two most widely accepted key currencies are USD (United States Dollars) and Euro. These currencies are often set as a key currencies for transactions due their stability, wide acceptance worldwide and their importance in global markets. Key currencies are mostly kept with the central banks of each country.
Whenever two companies from different countries are doing a business, they prefer keeping a common currency, which acts a key currency during financial transactions.