Forex Cross-Courses
What are Forex cross rates?
Cross rates – the ratio of the rates of two currencies, which is determined on the basis of their exchange rate to a third currency. Since at Forex all currencies are quoted to the U.S. dollar, the third currency is the U.S. dollar. In the currency market, the concept of cross rate characterizes currency pairs without the participation of USD.
How is the Forex cross rate calculated?
Forex cross rate is calculated through the main currency rates to the dollar (EUR/GBP currency pair is an exception).
For example, for the cross rate of euro to yen EUR / JPY the calculation formula is as follows:
In numbers it looks as follows:
EUR / USD = 1.10227 (current euro/dollar pair rate);
USD / JPY = 123.565 (current dollar/yen pair rate);
EUR / JPY = 1.10227 x 123.565 = 136.202 (current euro/yen cross rate).