To calculate the Cross Exchange Rate:
\[ \text{A:B} = \frac{\text{A:C}}{\text{B:C}} \]
Where:
A cross exchange rate is the ratio of exchange rates between two or more currencies on the open market. It is used to determine the value of one currency relative to another currency through an intermediary currency. For instance, if you know the exchange rates of currency A to currency C and currency B to currency C, you can use these rates to calculate the exchange rate between currency A and currency B. This concept can also apply to other non-currency items where exchange rates are relevant.
Assume the following exchange rates:
Using the formula:
\[ \text{A:B} = \frac{1.25}{0.85} = 1.4706 \]
The Cross Exchange Rate (A:B) is 1.4706.
Assume the following exchange rates:
Using the formula:
\[ \text{A:B} = \frac{0.90}{1.10} = 0.8182 \]
The Cross Exchange Rate (A:B) is 0.8182.