CROSS RATE Meaning and
Definition
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Cross rate refers to an exchange rate between two currencies that are not the official currencies of the country where the exchange rate is being quoted. It is the conversion rate between two foreign currencies, which are typically expressed by using a third currency as a medium of exchange. Cross rates are commonly used when trading in international financial markets, especially in situations where no direct exchange rate is provided between two specific currencies.
To understand cross rates, let's consider an example: if a trader wishes to convert US dollars (USD) into British pounds (GBP), but there is no direct exchange rate provided between these two currencies, a cross rate can be used. In this case, the trader would convert the USD to a third currency, such as euros (EUR), and then convert the euros to GBP. The rate at which the USD and GBP can be exchanged indirectly through the EUR would be the cross rate.
Cross rates play a crucial role in global financial markets as they allow investors and traders to conduct currency transactions that may not have a direct exchange rate available. It enables them to determine the relationship between different currency pairs and evaluate potential arbitrage opportunities. Traders closely monitor cross rates to assess market conditions and make informed decisions regarding currency trading and investments.
Common Misspellings for CROSS RATE
- xross rate
- vross rate
- fross rate
- dross rate
- ceoss rate
- cdoss rate
- cfoss rate
- ctoss rate
- c5oss rate
- c4oss rate
- criss rate
- crkss rate
- crlss rate
- crpss rate
- cr0ss rate
- cr9ss rate
- croas rate
- crozs rate
- croxs rate
- crods rate
Etymology of CROSS RATE
The etymology of the term "cross rate" can be traced back to its components: "cross" and "rate".
Firstly, the word "cross" in this context refers to the intersection or crossing of two different things. It comes from the Old English word "cros" or "cruc", which ultimately derives from the Latin word "crux". The term "cross" has various meanings, including the act of intersecting, crossing over from one side to another, or combining elements.
Secondly, the word "rate" refers to the ratio or proportion at which one thing is valued in relation to another. It stems from the Latin word "rata", which means "reckoned" or "calculated". Over time, "rate" evolved into its current usage as a numerical measurement or a standard unit of value.
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