C
   
   Cross Rate
   















 

C

Cross Rate

(1) The exchange rate between any two currencies. In practice, the term is most frequently applied to currency relationships that are nonstandard in the country where the currency relationship is quoted. In United States markets, a yen/D- mark rate would be a cross-rate, but in Tokyo or Frankfurt, it would be one of the primary currency relationships traded. (2) The implied exchange rate between two currencies derived from their respective exchange rates relative to a third currency. For example, suppose the exchange rate between the dollar and the pound equals 1.5 dollars per pound and the exchange rate between the dollar and the Deutschemark equals 0.70 dollars per Deutschemark. The implied cross rate between the pound and the mark equals .4667 pounds per Deutschemark. This cross rate is found by dividing the dollars per Deutschemark exchange rate by the dollars per pound exchange rate. The reciprocal of this value expresses the cross rate as Deutschemarks per pound, which equals 2.1429. This value can also be found by dividing the dollars per pound exchange rate by the dollars per Deutschemark exchange rate.

Glossary * C