Base Currency
The reference currency in which portfolio values are expressed.
The base currency (or reporting currency) is the currency used to express total portfolio value, income, and risk metrics. When a portfolio holds assets in multiple currencies, all values are converted to the base currency using prevailing exchange rates for aggregation and reporting purposes.
Currency Exposure
The fraction of portfolio value exposed to a foreign currency.
Cross Rate
An exchange rate between two currencies derived via a third common currency.
FX Risk
Risk from exchange rate fluctuations affecting foreign-denominated assets.
FX Volatility
Standard deviation of exchange rate changes — typically 5-15% annually.
FX Correlation
How currencies move with assets or other currencies — key for diversification.
Spot Rate
The current exchange rate for immediate delivery.