Cross Currency Pair
A cross currency pair is a type of currency exchange rate that involves two different currencies, without the U.S. dollar as one of the currencies. This type of currency exchange rate is also known as a non-dollar currency pair or a cross rate. Cross currency pairs are typically used by investors and traders to speculate on the relative strength of two different currencies.
History of Cross Currency Pairs
The concept of cross currency pairs has been around since the early days of currency trading. In the past, traders would use cross currency pairs to speculate on the relative strength of two different currencies. This type of trading was often done in the form of a forward contract, which is an agreement to exchange one currency for another at a predetermined rate at a future date.
Today, cross currency pairs are still used by investors and traders to speculate on the relative strength of two different currencies. However, the advent of online trading platforms has made it much easier for traders to access cross currency pairs. This has allowed traders to take advantage of the volatility of the currency markets and to capitalize on opportunities that may arise from changes in the relative strength of two different currencies.
Table of Comparisons
| Currency Pair | Exchange Rate |
|---|---|
| EUR/GBP | 0.86 |
| GBP/JPY | 142.50 |
| EUR/JPY | 125.50 |
Summary
Cross currency pairs are a type of currency exchange rate that involves two different currencies, without the U.S. dollar as one of the currencies. This type of currency exchange rate is also known as a non-dollar currency pair or a cross rate. Cross currency pairs are typically used by investors and traders to speculate on the relative strength of two different currencies. For more information about cross currency pairs, investors and traders can visit websites such as Investopedia, Bloomberg, and Reuters.
See Also
- Currency Pair
- Currency Exchange Rate
- Forward Contract
- Currency Trading
- Currency Volatility
- Currency Arbitrage
- Currency Hedging
- Currency Swaps
- Currency Options
- Currency Futures
