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.

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