In this article, We learn about "Cross Rates".Let's Go!
Cross Rates is used to calculate exchange rates for currency pairs where exchange rates are not commonly used.
For example EUR/GBP, CHF/JPY or AUD/NZD.
This process is called a cross rate because the exchange rate is calculated by comparing the value of each currency in the pair with a third (major) currency (usually the US dollar).
For example, if you know the AUD/USD and NZD/USD exchange rates, you can cross calculate the AUD/NZD exchange rate.
The term "cross rate" can also be used to refer to any currency pair that does not include the U.S. dollar.
The base currency always has a value of 1 and is the reference currency for the exchange rate of the currency pair.
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