Examples of Minor Cross Rates

Cross rates that are traded in the interbank market but are far less active include the Swiss franc versus the Japanese yen, or CHF/JPY, and the British pound versus the Swiss franc, or GBP/CHF.

Cross rates involving the Japanese yen are usually quoted as the number of yen versus the other currency, regardless of the other currency.

Cross quotes in currencies that are similar in value and quoting convention must be posted carefully in order to prevent mistakes in trading. For example, the New Zealand dollar (NZD) was quoted at 1.11 per Australian dollar (AUD) in early June of 2022.

Both of these currencies are quoted against the U.S. dollar. That is, the value reflects the number of U.S. dollars it would take to buy the foreign currency. However, the quote provides no guidance as to which is the base currency. The market convention is to use the stronger AUD, which is also the larger economy, as the base. However, the two currencies trade near parity to each other, creating the potential for a misquote.

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