After the basic exchange rate is worked out, the exchange rate of local currency against other foreign currencies can be calculated through the basic exchange rate. The exchange rate thus obtained is the cross exchange rate, also known as the arbitrage exchange rate.
In the international market, almost all currencies have exchange rates against the US dollar. The exchange rate of one non-US dollar currency to another non-US dollar currency often needs to be calculated through this exchange rate against the US dollar. This calculated exchange rate is called cross exchange rate. A remarkable feature of cross exchange rate is that one exchange rate involves the exchange rate between two non-US dollar currencies.
(Cross exchange rate) The exchange rate between two foreign currencies (usually not dollars). The dollar as a bridge to determine the cross exchange rate. For example, if an investor wants to sell Japanese yen to buy Swiss francs, he may sell Japanese yen to buy American dollars first, and then sell American dollars to buy Swiss francs. Therefore, although the transaction only involves the Japanese yen and the French franc, the exchange rate of the US dollar plays a benchmark role.
CrossRate means that after the base exchange rate is determined, the exchange rate of local currency against other foreign currencies can be calculated through the base exchange rate, so the obtained exchange rate is the cross exchange rate, also known as the arbitrage exchange rate. During the blind development of the futures market from 1992 to 1993, many Hong Kong foreign exchange brokers went to the mainland to conduct forex futures trading business without approval, and attracted a large number of domestic enterprises and individuals to participate. Because the vast majority of domestic participants do not understand the foreign exchange market and foreign exchange transactions, blind participation has led to large-scale and large-scale losses, including a large number of state-owned enterprises. 1In August, 1994, the CSRC and other four ministries jointly issued a document to completely ban forex futures trading (deposit). Since then, the management department has always held a negative attitude and severely cracked down on domestic foreign exchange margin trading.
2 Cross Exchange Rate Editor1At the end of 993, the People's Bank of China began to allow domestic banks to conduct firm foreign exchange trading for individuals. By 1999, with the standardization of the stock market, the profit margin of buying and selling stocks has been greatly reduced, and some investors have begun to enter the foreign exchange market. Domestic foreign exchange firm trading has gradually become a new investment method and entered a stage of rapid development. Foreign exchange trading has become the largest investment market except stocks. Compared with the domestic stock market, the foreign exchange market is much more standardized and mature. The daily trading volume of foreign exchange market is about 1000 times that of domestic stock market. Therefore, although the trading rules are not completely in line with international practice, the personal firm foreign exchange trading business provided by domestic banks has attracted more and more participants. Generally speaking, the vast majority of foreign exchange investors at home and abroad participate in the firm trading of domestic banks, and the margin trading will take some time for domestic investors because China is not yet open and the country's foreign exchange control policy.