Enter the exchange rate or currency A to C and the exchange rate from B to C into the cross exchange rate calculator. The calculator will return the Cross Rate from A to B.
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Cross Exchange Rate Formula
The following formula is used to calculate the cross exchange rate of 3 different currencies, A, B, and C.
A:B = A:C/B:C
- Where A, B, and C are different currency rates.
When analyzing currency exchanges it’s important to point out that the ratio of exchange rates is constantly changing from day to day. This formula can also be used to calculate cross-exchange rates of things that are not currencies.
Cross Exchange Rate Definition
A cross exchange rate is the ratio of exchange rates between two or more currencies on the open market.
How to calculate cross exchange rate?
How to calculate a cross exchange rate
- Determine the ratio between currency A and C.
Using your tool of choice, look up the exchange rate between currency A and C. This will be your A: C ratio
- Next, determine the ratio between currency B and C
This will be your B: C ratio. You can use the same tool or database as used in step 1.
- Finally, calculate A:B
Using the formula above and the ratios from steps 1 and 2, you can now calculate the A: B cross exchange rate.
A cross exchange rate is a term typically used in economics to describe the comparison of two currencies through the use of a third common currency. For example, if you know the rates between A and C and B and C, then you can estimate the rates between A and C assuming the same rules apply to exchanges.
Cross exchange rates can be used to calculate fair market values for exchanging any goods or services, not just currencies. For example, if you want a chicken, and it costs 1 blanket, but you don’t have a blanket, then you need to exchange something else, say a rock. If you know that rock is also worth one blanket, then you can exchange the rock for that chicken.