Cross rates: Difference between revisions

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''Foreign exchange.''
''Foreign exchange.''
Most foreign exchange rates are quoted against a widely traded currency, most commonly USD.
Most foreign exchange rates are quoted against a widely traded currency, most commonly USD.
For example USD/EUR, USD/JPY.
For example USD/EUR, USD/JPY.


The related cross rates are the foreign exchange rates between the other related currency pairs, calculated via the USD rates.
The related cross rates are the foreign exchange rates between the other related pairs of minor currencies, calculated via the USD rates.
 
For example the EUR/JPY rate, as calculated via the USD from the USD/EUR and USD/JPY quotes.
For example the EUR/JPY rate, as calculated via the USD from the USD/EUR and USD/JPY quotes.


Cross rate bid-offer spreads are normally wider than the bid offer spreads quoted against USD because they incorporate two bid-offer spreads against the USD, not just one.
Cross rate bid-offer spreads are normally wider than the bid offer spreads quoted against USD because they incorporate two bid-offer spreads against the USD, not just one.


== See also ==
== See also ==
* [[Bid-offer spread]]
* [[Bid-offer spread]]
* [[Foreign exchange rate]]
* [[Foreign exchange rate]]
* [[Forward rate]]
* [[Spot rate]]
* [[Swap rate]]


[[Category:Manage_risks]]
[[Category:Trade_finance]]

Latest revision as of 10:37, 28 July 2017

Foreign exchange.

Most foreign exchange rates are quoted against a widely traded currency, most commonly USD.

For example USD/EUR, USD/JPY.

The related cross rates are the foreign exchange rates between the other related pairs of minor currencies, calculated via the USD rates.

For example the EUR/JPY rate, as calculated via the USD from the USD/EUR and USD/JPY quotes.

Cross rate bid-offer spreads are normally wider than the bid offer spreads quoted against USD because they incorporate two bid-offer spreads against the USD, not just one.


See also