Cross Rate

Cross rates are used to calculate the exchange rate for a currency pair whose exchange rate is not commonly quoted.

For example, EUR/GBP, CHF/JPY, or AUD/NZD.

This process is known as a cross rate because the exchange rate is calculated by comparing the value of each currency in the pair against a third (major) currency, usually the U.S. dollar.

For example, if you know the AUD/USD and NZD/USD exchange rates, you can cross these to calculate the AUD/NZD exchange rate.

The term “cross rate” can also be used to refer to any currency pairs that do not include the U.S. dollar.

The base currency always has a value of one, and is the reference currency for the exchange rate of the currency pair.

Related Terms

Forex Trading

Forex trading is the simultaneous buying of one currency and selling another. When you trade in the forex market, you buy or sell in currency pairs. As the value of one currency rises or falls relative to another, traders decide to buy or sell currencies to make profits. Retail forex traders participate in the forex market […]

Currency Correlation

Currency correlation is a statistical measure that shows how two currency pairs move in relation to each other over a certain period of time.

Forex (FX)

Forex stands for “foreign exchange” and refers to the buying or selling of one currency in exchange for another. While it is called “foreign” exchange, this is just a relative term. The terms “foreign” and “domestic” are relative to the person using the term. What is foreign to someone is considered domestic to another. “Currency exchange” […]

Currency Pair

A currency pair is a price quote of the exchange rate for two different currencies traded in the foreign exchange market. Forex trading is the simultaneous buying of one currency and selling another. When you trade in the forex market, you buy or sell in currency pairs. Each currency in the pair is listed as […]

Binary Options

A binary option is a type of options contract in which the payout will depend entirely on the outcome of a “Yes or No?” or “True or False” proposition. Don’t be intimidated! Its name may sound complicated, but binary options are arguably a simpler way to trade than traditional options or currencies. Just like traditional […]