Los 19.a Flashcards
(4 cards)
1
Q
What is a cross rate?
A
A cross rate is the exchange rate between two currencies implied by their exchange rates with a common third currency.
2
Q
Why are cross rates necessary?
A
They are needed when there is no active FX market for a currency pair, so the rate must be calculated from their exchange rates with a third currency, usually USD or EUR.
3
Q
How do you calculate a cross rate?
A
Multiply the exchange rates of each currency with a third currency. For example, if MXN/USD = 10.70 and USD/AUD = 0.60, then the cross rate MXN/AUD = 0.60 × 10.70 = 6.42.
4
Q
A
