DTWEXBGS Explained: Meaning, Calculation, and 26-Currency Weighting

DTWEXBGS aggregates the dollar against 26 partner currencies weighted by bilateral trade flows and refreshed annually. The formula is written as weighted geometric averages, but it reads through trade flows.

This piece does not unpack what DTWEXBGS signals — that belongs to the cluster’s main article. It does one thing: expose the calculation mechanics, because without them, reading DTWEXBGS as a signal rests on a black box.

Per the Federal Reserve’s official documentation (Statistical Release H.10, January 2019 revision), DTWEXBGS — for Daily Trade Weighted Exchange Rate Broad Goods and Services — aggregates bilateral dollar moves against 26 partner currencies. Weights are refreshed annually, which separates DTWEXBGS from any fixed-composition construction. The cross-sectional analysis of these dynamics is developed in our analysis of dollar shortage episodes. The index baseline (100) is set at January 2006. Daily publication began in January 2019; before that, the index was weekly. The relevance of DTWEXBGS for analyzing the dollar in the global monetary system depends, first, on these methodological choices, which deserve to be made explicit.

Origin and the January 2019 methodological revision

DTWEXBGS in its current form dates to January 2019. Before that, the Federal Reserve published a family of separate indices: DTWEXB for the Broad index, DTWEXM for Major currencies, DTWEXO for Other Important Trading Partners. The fragmentation reflected an earlier distinction between developed-economy currencies and emerging-partner currencies — a distinction that became increasingly contested as the actual composition of U.S. foreign trade evolved.

The January 2019 revision unified the architecture. Three indices now coexist: DTWEXBGS for the full broad perimeter (26 currencies), DTWEXAFEGS for Advanced Foreign Economies (a subset of developed-economy currencies), DTWEXEMEGS for Emerging Market Economies (a subset of emerging-market currencies). All three use the same weighting methodology and the same January 2006 = 100 baseline, which makes the sub-indices directly comparable. The Fed continues to publish detailed documentation in Statistical Release H.10, publicly accessible and revised annually.

Another structural change accompanied the revision: the shift from weekly to daily calculation. Before January 2019, DTWEXBGS was published every Friday from the week’s average exchange rates. Since then, it has been computed each business day from FX-market closing rates. This shift makes the series more comparable to the intraday DXY, while retaining an official character — the DXY being a commercial product of Intercontinental Exchange, DTWEXBGS being a public statistic of the Federal Reserve.

The weighted geometric formula

DTWEXBGS is not a simple arithmetic average of the 26 exchange rates. The Fed adopts a weighted geometric mean — standard convention in exchange-rate index theory, because it avoids the biases associated with adding bilateral variations. Concretely, the index at time t is expressed as the product of bilateral exchange rates at t divided by their product at t-1, with each ratio raised to the power of the corresponding currency’s trade weight.

The practical consequence: a +5% move of the dollar against all currencies weighted equally produces exactly +5% on the index. Conversely, asymmetric moves combine according to weighted product roots, not according to a simple algebraic sum. This property explains why DTWEXBGS can remain relatively stable even when the dollar rises sharply against part of the basket and falls against another — a frequent phenomenon in regional divergence phases.

The geometric formula carries an analytical cost: it masks individual contributions. An observed DTWEXBGS variation does not, on first reading, indicate which currency drove the move. Disaggregation requires an independent pair-by-pair calculation. For macro analysis, that is an accepted limit; for currency-risk analysis of a portfolio, it is a reason never to use DTWEXBGS as a hedging proxy.

The 26 currencies in the 2026 basket

The 2026 DTWEXBGS composition, per the latest Fed revision (Statistical Release H.10, December 2025), is as follows in descending order of approximate weight: Chinese yuan (14.8%), Mexican peso (14.2%), euro (12.1%), Canadian dollar (11.7%), Japanese yen (5.9%), South Korean won (4.3%), British pound (3.8%), Brazilian real (2.2%), Indian rupee (2.1%), Singapore dollar (1.9%), Swiss franc (1.7%), Taiwan dollar (1.7%), Thai baht (1.3%), Hong Kong dollar (1.3%), Australian dollar (1.2%), Colombian peso (0.9%), Swedish krona (0.8%), Polish zloty (0.6%), Israeli shekel (0.6%), New Zealand dollar (0.5%), Chilean peso (0.5%), Norwegian krone (0.4%), Philippine peso (0.4%), Czech koruna (0.3%), Argentine peso (0.2%), Venezuelan bolivar (negligible).

This weight structure prompts three observations. First, two emerging currencies — yuan and peso — alone account for 29% of the basket. Both are entirely absent from the DXY. Second, the sum of the five main emerging currencies (yuan, peso, won, real, rupee) reaches 37.4% of the basket. DTWEXBGS therefore assigns more weight to emerging economies than to the euro taken individually. Third, the basket includes currencies of heterogeneous status: fully convertible, freely floating currencies (euro, yen, pound); currencies managed with discretionary interventions (yuan, real); and frontier-market currencies under capital controls (Argentine peso, bolivar). This heterogeneity is documented by the Fed as a deliberate choice: the index measures actual trade flows, not the institutional quality of the corresponding FX markets.

Annual rebalancing and its cyclical effect

Each December, the Fed recalculates DTWEXBGS weights from the U.S. bilateral trade data of the preceding year. The methodology is explicit: each partner country’s share of the total of U.S. exports plus imports, goods and services combined, calculated over the previous calendar year. The new weights apply from the first business day of the following January and remain in effect for twelve months.

This revision produces a cyclical effect sometimes misunderstood by long-series analyses using the index. When U.S. trade pivots geographically — for instance, the China-to-Mexico rebalancing observed since 2018 — the index gradually incorporates the shift. The yuan weight, which stood at approximately 21.5% in 2006, has receded by about 6.7 points over twenty years. The peso weight, conversely, has moved from approximately 11.4% to nearly 14.2%. Over the same period, structurally smaller weights have marginally strengthened: the Indian rupee, for example, gained 0.8 points.

Operational consequence: the reconstructed DTWEXBGS history since 1973 uses the contemporaneous weights of each period, not a single weight applied retrospectively. This makes the series mathematically consistent with historical trade realities, but renders any raw level comparison between 1980 and 2026 partially biased by basket recomposition.

Broad, Advanced Foreign Economies, Emerging Market Economies — three sub-families

The DTWEXBGS family actually comprises three indices that the Fed publishes in parallel since January 2019. DTWEXBGS itself covers all 26 currencies. DTWEXAFEGS isolates Advanced Foreign Economies — typically euro, yen, pound, Canadian dollar, Swiss franc, Swedish krona, Australian dollar, New Zealand dollar, and a few other developed currencies. DTWEXEMEGS isolates Emerging Market Economies — yuan, peso, won, real, rupee, and the remainder of emerging currencies in the basket.

This decomposition serves a precise analytical purpose: it answers the question “is the dollar rising against developed or emerging currencies?” In February 2023, for example, DTWEXBGS rose +3.1%, but this increase decomposes into +1.2% against AFE and +5.0% against EME — signaling specific emerging-market stress, invisible in a broad-only reading. The practice is to read the three indices jointly and use their divergence as a cycle-configuration indicator. The difference with the narrower DXY resides precisely in this granularity: the DXY has no AFE/EME equivalent because its basket contains no emerging currencies. Readers consulting the DTWEXBGS dataset on Eco3min will also find the corresponding AFE and EME series in their downloadable form.

Why methodology changes the reading

Three methodological traits of DTWEXBGS condition what the index can reveal. The trade-flow perimeter limits its scope to dollar pressure on goods and services flows — not on financial flows, which represent the majority of FX market volumes. The geometric weighting masks individual contributions, requiring pair-by-pair disaggregation to identify the drivers of any move. Annual rebalancing introduces a commercial memory that distinguishes DTWEXBGS from any frozen index, but complicates level comparisons across long series.

These three traits are not flaws. They are explicit methodological choices that define what is asked of the index: measure dollar strength against actual trade partners, with dynamic weights and substantial emerging-market coverage. Any interpretation of DTWEXBGS that ignores these three traits drifts toward confusion.

Last updated — 28 May 2026