Cross Rate (cross course).

The term originated from the quotation of foreign currencies against each other, after which the US dollar became the basis for direct quotation.

A cross rate is the exchange rate between two currencies, where both currencies in the quote are not the US dollar. In this case, the country in which the exchange occurs is completely irrelevant.

To establish an accurate relationship between currencies in a cross quote, each currency is first evaluated against the US dollar. Therefore, when the US dollar weakens or strengthens, most other global currency rates also change.

Cross rates are typically calculated using a fairly simple formula:

B/K = B/USD x USD/K. In this formula, B is the base currency in the currency pair, K is the quote currency, and USD is the US dollar.

A more detailed explanation of how this calculation works can be found using a specific cross rate example:

GBP/JPY = GBP/USD x USD/JPY = 1.55 x 93.48 = 144.894, which means one British pound is worth 144.894 Japanese yen.

However, the resulting quote may vary slightly between different dealing centers due to spread differences and data reporting delays.

Nowadays, it is not at all necessary to independently carry out such calculations to obtain crosses for any currency pair; it is enough to simply find out the current quotes on the foreign exchange market .