Legal Definitions - cross-rate

Definition: Cross-rate refers to the exchange rate between two currencies expressed as the ratio of two foreign exchange rates in terms of a common third currency, usually the U.S. dollar. Foreign exchange rate dealers use cross-rate tables to look for arbitrage opportunities.

Example: Suppose the exchange rate between the U.S. dollar and the euro is 1:0.85, and the exchange rate between the U.S. dollar and the Japanese yen is 1:110. Then, the cross-rate between the euro and the yen would be 1:129.41 (110/0.85).

This means that one euro can be exchanged for 129.41 Japanese yen. Cross-rate is used to determine the value of one currency in terms of another currency, which is useful for international trade and investment.