For example, the RUB/ZAR exchange rate is 1.4876, and the ZAR/CNY exchange rate is 1.6459. a. Legal. Companies are exposed to three types. In the table, all exchange rates have been rounded to four decimals. A trading strategy that exploits arbitrage opportunities among three currencies. Step 2: If there are no buy or sell rates, skip this step. Cross currencies allowed people to bypass this step by making this type of exchange directly, without the need to convert to USD. direct quote vs indirect quote), we would need to take a raciprocal of the exchange rate to get the exchange rate in B/C form. If the sell rate is 1.5% above the mid-rate, how have the manufacturer's costs changed? Happy Jalapenos has decided to hedge as follows: 74.80. Solution: The cross-rate formula we want to use is: S (j/k) = S ($/k)/S ($/j). In practice, any currency exchange in which neither of the currencies is the U.S. dollar is considered a cross rate. The euro is the base currency for the quote if it is included in the pair. This can be explained by the nature of foreign currency exchange markets. For example, Canadians express the US dollar exchange rate on a per \(C\$\) basis. The triangular matrix will contain 4 x (4 + 1)/2 = 10 elements. The cross rate is the currency exchange rate between currency A and currency C derived from exchange rate between currency A and currency B and between currency B and currency C. Currency vendor provides quotes for only the most liquid currencies such as the US dollar, Euro, Pound Sterling, Swiss Franc, etc. Thus, the ask price is : = 153.9773. The distance between two cities on the map is 15 centimeters. It is, therefore, possible to back out the cross-rates between the Chinese yuan and the Russian ruble, which is quoted as (RUB/CNY) according to market conventions and can be represented as: $$\frac{RUB}{ ZAR}\times \frac{ZAR}{CNY} = \frac{RUB}{CNY}$$. From equities, fixed income to derivatives, the CMSA certification bridges the gap from where you are now to where you want to be a world-class capital markets analyst. Solutions for Chapter 4 Problem 29Q: Movements in Cross Exchange Rates Last year a dollar was equal to 7 Swedish kronor, and a Polish zloty was equal to $.40. The exercises below with solutions and explanations are all about solving rate problems. For example, the New Zealand dollar (NZD) was quoted at 1.11 per Australian dollar (AUD) in early June of 2022. In the UK, they took (iii) as given, but (i) and (ii) were in con ict. We manage social media groups with more than 200,000 members with almost 100% engagement. We also use third-party cookies that help us analyze and understand how you use this website. x[+aPH6GPX>Y:! Download Sample Now Earn back money you have spent on downloaded sample PAY 14.99 USD TO DOWNLOAD Cite This work. This activity is supported by a grant from Japan. 2) UK pound (GBP) Technically, only half of the table is needed, since one side of the diagonal line is nothing more than the inverse of the other. Finding the same exchange rate in Swiss Franc per Euro would involve taking a reciprocal of the exchange rate calculated above. When cross rates differ from the direct rates between two currencies, intermarket arbitrage is possible . This section opened with your backpacking vacation to the United States, Mexico, and Europe, for which you were quoted prices of US$1,980, MXN$21,675, and 1,400 for hostels. Assume that interest rate parity exists. Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), EUR/GBP = Euro/UK Pound Sterling FX Cross Rate, AUD/NZD = Australian Dollar/New Zealand Dollar FX Cross Rate, EUR/SEK = Euro/Swedish Krona FX Cross Rate. When a cross-currency pair is traded, two transactions are actually involved. An example of a cross currency rate is the EUR/GBP or the GBP/JPY. A cross rate by definition may be any exchange of any two currencies that are not the official currency of the country in which the quote is published. Some are not quoted directly at all, so a quote must be constructed from the bids and offers in the component currencies versus the U.S. dollar. Western Union Business Solutions is now Convera! a free user account and in seconds you'll be experiencing the best in CFA exam preparation. List of Excel Shortcuts Suppose the total cost of the imported parts, purchased and paid for in Canadian funds, is C$5.50 per unit, assembly costs are MXN$24.54 per unit, and expenses are MXN$4.38 per unit. 3) Australian dollar (AUD) This video shows how to calculate the cross exchange rate between currencies. Below, we will show in extensive detail how the exchange market price made in two currencies differs vastly between each scenario. It is possible that high transaction costs may erase gains from the price discrepancies. Then according to the asset theory of exchange rate determination, the exchange rate today should be approximately a. Most, but not all, currency transactions go through the dollar. Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? Learning Module 15. You are in UK and $/ exchange rate is 1.540- 1.560 and / is 149.06 149.50. << /Length 5 0 R /Filter /FlateDecode >> We also acknowledge previous National Science Foundation support under grant numbers 1246120, 1525057, and 1413739. If you have ever purchased and returned an item to an international seller, you may have noticed that you did not receive all of your money back. The exchange rates we already have are in the form of $/ and /. In any currency situation, it is important that you take the time to understand the basis on which the currency rate is being expressed. The cross-rate for the pair must be equal: Triangular arbitrage can be applied to the three currencies the US dollar, the euro, and the pound. In each of the following situations and using the cross-rate table, determine on a strictly numerical basis whether you would have more or fewer units of the target currency than of the original currency. Learn more. As a result, currency B appreciates because a single unit of currency B can now buy more of currency A. Thank you for reading CFIs guide on Triangular Arbitrage Opportunity. USD is the currency abbreviation for the United States dollar, the official currency of the United States of America. 17 points Assume cross-rate equality exists and the following exchange rates are true: USDO.67/NZD USDO.75/AUD Calculate the N2D/AUD exchonge rate. Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Calculating the Foreign Exchange Rate Spread, Forex Trading: How to Trade the Forex Market, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Sell dollars for euros:$1,000,000 x 0.8678, Sell pounds for dollars: 666,461.87 x 1.5028. Today, the dollar is equal to 8 Swedish kronor, and a Polish zloty is equal to $.44. This point is illustrated in Example 2 below. USD. When you work with currency appreciation or depreciation, you still use the same basic steps as before. 3 Top Tips for Handling the Costs of College for Your, How To Brew The Perfect Pour Over Coffee At Home, Tips for Planning an Unforgettable Stargazing Road Trip This Fall, 5 Ways to Upgrade Your Hospitality Business, A Comprehensive Guide to Offering Quality Security Guard Services, Impact of Web Design on SEO: Top 9 Most Common Mistakes, How to Solve Issues with a Search Engine Optimization Strategy, Why a Saas SEO Agency Should Be on Your List. You are welcome to learn a range of topics from accounting, economics, finance and more. Sometimes, it is important to invert one of the quotes to get the intermediary currency to cancel out in the equation and get the cross rate. Cross rates involving the Japanese yen are usually quoted as the number of yen versus the other currency, regardless of the other currency. But . Accessibility StatementFor more information contact us atinfo@libretexts.orgor check out our status page at https://status.libretexts.org. EXAMPLE 2: Similarly, if the exchange rate drops to US$1.01, then your \(C\$\)1 purchases one less penny of the US dollars. for that same equivalent value in U.S. dollars. Therefore, any published table needs to indicate the date and time at which the rates were determined. Nowadays, triangular arbitrage opportunities are often exploited by high-frequency traders. When a large fraction of a country's trade is denominated in foreign currencies, its rate of inflation is more strongly affected by exchange-rate fluctuations. Considering a foreign exchange market with the exchange rate between the South African rand and the Chinese yuan, this market can also quote the exchange rate between the South African rand and the Russian ruble (RUB). King Fahd University of Petroleum & Minerals, Deadlocks are possible only when one of the transactions wants to obtain an lock, CONCEPT American Foreign Policy in the Progressive Era 13 President Richard, household_institutional_and_industrial_pest_management.pdf, and other paperwork Mona has a very curt manner of speaking and you have noticed, Jan 1 Purchased office equipment Paid cash and financed the remaining with a, RAID 2 RAID 2 RAID 0 RAID 0 RAID 1 RAID 1 RAID 5 RAID 5 Explanation Explanation, Sources of food and other essential nutrients for corals include all of the, Wk4_Team_Financial Management_Payment Systems and Participants.docx, To simulate a zener diode in the figure 3 1 use the D1N750 model from the EVAL, a Interest b Adoption c Trial d Awareness Selected e Evaluation This answer is, BE Promoting Diversity Equity and Inclusion Through Goal Setting Siri Chilazi, CN2103 Tutorial and Homework 01 (Week 3).pdf. Start studying for CFA exams right away. For example, the euro is \(0.7137\) per \(C\$\) on the bottom of the diagonal. JPY 109.526 X. Calculate the total profit (\(P\)) in MXN$ for the Mexican manufacturer. The foreign exchange, or Forex, is a decentralized marketplace for the trading of the world's currencies. If buy and sell rates are involved, calculate these rates in the manner specified by the financial institution. By what percentage did the cross exchange rate of the Polish zloty in Swedish kronor (that is, the number of kronor that can be purchased with one zloty . Exchange rates between other currencies is normally calculated as the cross rates using the quotes for major currencies. Today, an Australian dollar (A$) is worth $.50 and HK$3.9. EXAMPLE 1: If \(C\$\)1 buys US$1.02 and the exchange rate rises to US$1.03, then your \(C\$\)1 purchases an additional penny of the US dollars. TechnologyHQ is a platform about business insights, tech, 4IR, digital transformation, AI, Blockchain, Cybersecurity, and social media for businesses. Once U.S. dollars have been received, an exchange occurs again when the U.S. dollars are traded for the second specific currency. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. During this process, two transactions are being computed. Exchange rate risk refers to the risk that a company's operations and profitability may be affected by changes in the exchange rates between currencies. Solutions-driven individual with experience in solving complex problems, working with cross-functional teams, and building project plans in Jira, Asana, and Microsoft Office. The Price of Milk and the Price of Foreign Currency An . Formula 7.4 expresses this relationship in the language of currency exchange. In our simplified example, we did not account for transaction costs. These two exchange rates allow Canadians to determine how many US dollars their money can buy and vice versa. 5) US dollar (USD) Money transfer and foreign exchange Services in the US are provided by Convera USA, LLC (NMLS ID: . (1/149.50 1/149.06). This concept varies when it comes to indirect and direct quotations, however. Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. MODULE 4 APPLICATION 1 Fernando Gomez International Finance 28-03-2015 Chapter 5 2. support@analystprep.com. My understanding was that a:b = a/b isn't it? We compete with all local competitors. The ratio is JPY:USD not USD:JPY. When a customer makes a purchase using a Traveler card in a currency different from the customer's home currency, the bank converts the purchase price at the daily foreign exchange rate and then charges a 4% fee on the converted cost. The ask price: a bank will sell U.S. dollars for yen high ($: = 121.95), and buy U.S. dollars with euro low ($: = 0.7920). the best remittance rates, such as when sending money from Canada to India. See the most traded currency crosses that are displayed by popularity and regions. If the Canadian dollar has appreciated, it buys more US dollars per \(C\$\). Y>1yiP27cuXpD(0"$_gLG"' ,clA% 2Y. Obviously, the above equation would not hold, but it would present an arbitrage opportunity in the FX spot market, as illustrated below: Start: $1,000,000.00. In the transaction described above, the U.S. dollar is used to establish the value of each of the two currencies being traded. In this example, we look to calculate EUR/JPY or Euro Yen, which would mean that the base currency in question is the Euro. Notes: Round your answer and intermediate steps to four decimal places. b. the consumer price index. James Chen, CMT is an expert trader, investment adviser, and global market strategist. 2 Lecture outline Competitiveness Bilateral nominal exchange rate and cross Sara lives in the United States, but is on vacation in India. Calculate the $/ exchange rate. Integrated Problem 01 . if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[300,250],'xplaind_com-medrectangle-3','ezslot_0',105,'0','0'])};__ez_fad_position('div-gpt-ad-xplaind_com-medrectangle-3-0');if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[300,250],'xplaind_com-medrectangle-3','ezslot_1',105,'0','1'])};__ez_fad_position('div-gpt-ad-xplaind_com-medrectangle-3-0_1'); .medrectangle-3-multi-105{border:none !important;display:block !important;float:none !important;line-height:0px;margin-bottom:7px !important;margin-left:auto !important;margin-right:auto !important;margin-top:7px !important;max-width:100% !important;min-height:250px;padding:0;text-align:center !important;}. For example, in 1968 the U.S. Treasury determined that it would buy and sell one ounce of gold at a cost of $35. The first being the individual trading their one specific currency (EUR, JPY, GBP, etc.) How many cars can Lynnette wash in 11 11 days? Need Some Archery Inspiration? Let the buyer beware when it comes to international transactions. The second exchange rate indicates what one dollar of US currency becomes in Canadian currency. While this might not always be necessary with the most common crosses,given that there are already many money transfer operators that will get you the best remittance rates, such as when sending money from Canada to India. Value. hb```f``2d`a``| @V8&>LRvl``(tF)\8::,::;:4T?'Y`-@+ET2`be-l{G;\90u2zC!x{f" K# endstream endobj 35 0 obj <> endobj 36 0 obj <> endobj 37 0 obj <>stream Inspired by Craig Wright's idea of Bitcoin, I became a BSV entrepreneur by establishing a company to build solutions for world problems using the BSV blockchain. Question & Answers (2,468). As the base currency, the U.S. dollar always has a value of one. For example, to work out EUR/GBP, you would need to know the bid price for EUR/USD and USD/GBP note that the latter does not follow the convention of GBP as base currency. How Is SEO Helpful For Business Startups? If the exchange rate in terms of yen per unit of the Mexican pesos decreases, which currency weakened? The economy was in a recession, so the central bank wanted to lower interest rates. 34 0 obj <> endobj 53 0 obj <>/Filter/FlateDecode/ID[<0E7F22EC4E614FEC9C449CF875CD03AC>]/Index[34 33]/Info 33 0 R/Length 99/Prev 122058/Root 35 0 R/Size 67/Type/XRef/W[1 3 1]>>stream What Games Are Chosen in Poland and Why? In terms of cross-sectional area and flow speed, the volume flow rate is. In addition, the triangular arbitrage strategy provides applications in cryptocurrency trading. Let's connect. A Mexican manufacturer imports its parts from Canada and assembles its product in Mexico, then exports some of the finished product back to Canada to sell at retail. The website quotes you the following amounts for each country: 1,980 US dollars, 21,675 Mexican pesos, and 1,400 euros. Particulars. Finance questions and answers. With consideration of this, the banks perspective of the EUR/JPY cross rate would be 90.01-90.03. Based on the supply and demand model of the exchange rate, which of the following should cause the Philippine peso to appreciate? The market convention is to use the stronger AUD, which is also the larger economy, as the base. Currency Exchange Rates, Good explanation but the CFA material states the rate 119.05 as a direct quote is JPY:USD making the Yen the price currency. For example, the U.S. dollar/Mexican peso exchange rate is the price of a peso expressed in U.S. dollars. The price discrepancies generally arise from situations when one market is overvalued while another is undervalued. Large-scale companies may have operations in several countries throughout the world. A triangular arbitrage opportunity is a trading strategy that exploits the arbitrage opportunities that exist among three currencies in a foreign currency exchange. The additional skill you require in the first step is to adjust an exchange rate appropriately based on how it has appreciated or depreciated. Step-by-step solution 100% (3 ratings) for this solution Step 1 of 5 Determine the exchange rate using yen, dollar and Swiss franc: a) Calculation of exchange rate of yen per franc: Exchange rate of yen per Swiss franc is determined by multiplying the yen per dollar with the U.S. dollar per Swiss franc. An exchange rate is a price, specifically the relative price of two currencies. Follow these steps when performing a currency exchange: Step 1: Identify all known variables. Exchange Rate Questions and Answers Test your understanding with practice problems and step-by-step solutions. Check free live currency rates, send fast money transfers to 130+ countries, and view currency data and analysis using the most accurate, up-to-the-minute data. Now, we need to derive the bid price for USD/GBP from the published bid price for GBP/USD, which well say is 1.7500. What are the tips to select data science courses online? Cross rate with bid-ask quote You are in UK and $/ exchange rate is 1.540- 1.560 and / is 149.06 - 149.50. Please provide your suggestions/feedback at this link: click here If you are facing any difficulties with the new site, and want to access our old site, please go to https://archive.nptel.ac.in 1.4 Billion+ views, 4 Million+ YouTube subscribers, Solution: The cross-rate formula we want to use is: S (j/k) = S ($/k)/S ($/j). Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. When working with currency exchange, probably the trickiest element is that you have to choose one of two inverse exchange rates depending on which way the money conversion is taking place. Questions and Answers ( 2,475 ) Suppose that. Currencies, exchange rates, and currency cross-tables all raise issues regarding decimals and financial fees. After converting all Canadian currency into Mexican pesos and factoring in the financial institution's buy and sell rates, the manufacturer realizes a profit of $201,622.90 in Mexican pesos. Find the exchange rate between Euro and Swiss Franc in per Swiss Franc. 1751 Richardson Street, Montreal, QC H3K 1G5 NOVEMBER 24 - DECEMBER 3, 2014 . Use Cases. Forex markets are extremely competitive with a large number of players, such as individual and institutional traders. Solution: 01. Your answer should be expressed in NZD per AUD. Although exchange rates are published in a variety of ways, a currency cross-rate table, like the table below, is most common. Forex (FX): How Trading in the Foreign Exchange Market Works, What Is a Direct Quote? The manufacturer has its input costs decrease by $11,962.50 since \(C\$\)1 now purchases more US$. To work out a cross rate, you need to have the bid prices for both of the currencies involved when paired in that order with the USD. Definition, Uses, Importance, USD/JPY (U.S. Dollar/Japanese Yen): Explaining the Currency Pair. Note the mid-rate used is per \(C\$\) since the manufacturer needs to purchase Canadian funds to pay its suppliers and also needs to sell its Canadian revenues to the bank. Cross exchange rates: Find the direct bid-ask quote, King Fahd University of Petroleum Minerals. hV[oJ+^eZ!KG4R UHcHRhv83D+sI!\r-GSD{w0p{AIPEtj":)?f7[q[,b4(0T%FI I4wz*P)]n8dm=Q h8u~_?%,d!_=ACrnV["ELr. Cable is a term used among forex traders that refers to the exchange rate between the U.S. dollar (USD) and the British pound sterling (GBP). For example, if you see on a financial news site that USD/CAD is quoted at 1.28, it means that one U.S. dollar is currently equal to 1.28 Canadian dollars. The reciprocal exchange rate for / is / which equals 0.006689 0.006709 calculated by taking reciprocal of the / exchange rate's bid and ask legs and then switching their positions i.e. What is a contact center as a service (CCaaS)? USD/JPY is the abbreviation used to denote the currency exchange rate for the U.S. dollar and Japanese yen. That is, one of the currencies being swapped is the U.S. dollar. In simple terms, when you see an exchange rate where there is no U.S. dollar, it refers to the cross currency rate. Although it may seem complicated to grasp on paper, we will be using a comprehensive example in order to further illustrate the transaction. Businesses are no different as they export and import products to and from other countries. $ in numerator and in denominator. One of the most common cross currency pairs is the euro and the Japanese yen. The first being the individual trading their one specific currency (EUR, JPY, GBP, etc.) CA Coaching Institute | Sanjay Saraf Educational Institute SSEI Check Out These World Class Archers and. Considering a foreign exchange market with the exchange rate between the South African rand and the Chinese yuan, this market can also quote the exchange rate between the South African rand and the Russian ruble (RUB). their USD exchange rates in European terms copied from Exhibit 5 in the first column. An indirect quotation is a currency quotation that is used to express how much base currency is needed to buy one unit of the quoted currency. Desired Currency = 12.1445 $1,500 = $18,216.75. Simplicity or Complexity? The offers that appear in this table are from partnerships from which Investopedia receives compensation. A: The formula used as follows: Cross rate=YenDollarDollarPeso Q: Suppose the Japanese yen exchange rate is 109 = $1 and the British pound exchange rate is 1 = A: In finance, a currency exchange rate represents the value of one country's currency against per unit Further, GARP is not responsible for any fees or costs paid by the user to AnalystPrep, nor is GARP responsible for any fees or costs of any person or entity providing any services to AnalystPrep. Investopedia requires writers to use primary sources to support their work. Cross Exchange Rates Quotes With Bid and Ask Quotes: In-Class Exercise Direct dollar quotes: - For Swiss Francs: Bid-Ask Quote: $0.5205-50 - For Canadian Dollar: Bid-Ask Quote: $0.8510-95 Cross exchange rates: Find the direct bid-ask quotefor Canadian dollars, stated in Swiss Francs gJ,ct CDb'c1lyre.5Ie -0:- 0,IS ')-, CJ 1k 0 10\,')2 )D$ Most Canadian daily and business newspapers publish exchange rates in their financial sections. If the British pound is included but the euro is not, the pound is the base. How to Choose a Forex Broker: What You Need to Know, Bid-Ask Spreads in the Foreign Currency Exchange Market, What Is Cross Currency Triangulation? These include white papers, government data, original reporting, and interviews with industry experts. If MXN : USD = USD/MXN = 0.0923, does it mean 1 USD = 0.0923? USD = 1 = 250. We are doing our best to resolve all the issues as quickly as possible. As mentioned, the USD is the base currency (monetary value of $1), while the non-domestic currency is considered the quoted currency. While the pure definition of a cross rate requires that it be referenced in a place where neither currency is used, the term is primarily used to reference a trade or quote that does not include the U.S. dollar. In this case, the EUR is the base currency, so it must be on the denominator. Save 10% on All AnalystPrep 2023 Study Packages with Coupon Code BLOG10. Take Canadian currency and convert it into the desired Mexican currency. You have $18,216.75 Mexican pesos available for your spring break vacation. Frequently, the transactions employ margin trading to amplify the returns. Step 3: Apply Formula 7.4 to each of these currencies: \[ \text { US}\$ \text{: Desired Currency }=\mathrm{US} \$ 1,980 \times 1.0032=\mathrm{C} \$ 1,986.34.\nonumber \], \[ \text { MXN}\$ \text{: Desired Currency }=\mathrm{MXN} \$ 21,675 \times 0.0844=\mathrm{C} \$ 1,829.37.\nonumber \], \[ \text {: Desired Currency }= 1,400 \times 1.4362=\mathrm{C} \$ 2,010.68.\nonumber \]. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below: A free, comprehensive best practices guide to advance your financial modeling skills, Get Certified for Capital Markets (CMSA). Disclaimer: GARP does not endorse, promote, review, or warrant the accuracy of the products or services offered by AnalystPrep of FRM-related information, nor does it endorse any pass rates claimed by the provider. Determine the exchange rate between US and Euro as displayed: -. Both of these currencies are quoted against the U.S. dollar. Therefore, the transactions in a triangular arbitrage opportunity involve trading large amounts of money. This presentation deals with exchange rate quotations, common currency symbols, direct and indirect quotes, American terms, European terms, cross rates, Bid and Ask rates, Mid rate, Spread and its determinants, Spot markets, Forward Markets, Premium and Discounts, various practices of writing quotations, calculating broken period forward rates, Cross exchange rate discrepancies. That is, the value reflects the number of U.S. dollars it would take to buy the foreign currency. The U.S. dollars are then exchanged for another currency. A dollar will buy 1/0.154 = 6.49351 krones tomorrow. Currencies are actively traded in the international marketplace, which means that exchange rates are changing all the time. You also have the option to opt-out of these cookies. Storylines. Firstly, we must find the bid/offer valuation of the two exchange pairs being used. It is possible to back out the cross rates given two exchange rates involving three currencies.