# CROSS RATES

Discuss CROSS RATES within the Financial Management ( FM ) forums, part of the Resolve Your Query - Get Help and discuss Projects category; We know that US dollar being the currency of intervention only US dollar/rupee exchange rate is available in the Indian ...

 CROSS RATES
Sunanda K. Chavan

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Join Date: Jul 2010
CROSS RATES - October 8th, 2010

We know that US dollar being the currency of intervention only US dollar/rupee exchange rate is available in the Indian Forex market and exchange rates of rupee with all other foreign currencies are derived from this rate through crosses.

If we want to remit French from India, exchange rate of French franc/rupee has to be arrived at. What we have to do is the first buy US dollar against rupee and by selling US dollar so bought, say in London market, we buy French franc.

Let us understand by an example…

If exchange rates in Mumbai interbank market and London market are as follows:

Interbank market Mumbai

US \$ 1 = Rs. 41.2550-41.2650

London Market

US \$ 1 = FRF 6.0500-6.0550

The transaction will proceed like, interbank market takes rupees 41.2650 and gives US \$ 1.

This US \$ is taken to the London market for conversion in the FRF. The London market takes US \$ 1 and gives FRF 6.0500.

So we can calculate the direct rate between FRF and INR.

FRF 6.0500 = US \$1 And US \$ 1 = RS. 41.2650 Therefore, FRF 6.0500 = US \$ 1 = RS. 41.2650

So, FRF 1 = RS.41.2650/6.0500 = RS. 6.8206

In this way, banks can calculate exchange rate between any two currencies.

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 Re: CROSS RATES
Rose Marry

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Join Date: Apr 2016
Re: CROSS RATES - April 15th, 2016

Quote:
 Originally Posted by sunandaC We know that US dollar being the currency of intervention only US dollar/rupee exchange rate is available in the Indian Forex market and exchange rates of rupee with all other foreign currencies are derived from this rate through crosses. If we want to remit French from India, exchange rate of French franc/rupee has to be arrived at. What we have to do is the first buy US dollar against rupee and by selling US dollar so bought, say in London market, we buy French franc. Let us understand by an example… If exchange rates in Mumbai interbank market and London market are as follows: Interbank market Mumbai US \$ 1 = Rs. 41.2550-41.2650 London Market US \$ 1 = FRF 6.0500-6.0550 The transaction will proceed like, interbank market takes rupees 41.2650 and gives US \$ 1. This US \$ is taken to the London market for conversion in the FRF. The London market takes US \$ 1 and gives FRF 6.0500. So we can calculate the direct rate between FRF and INR. FRF 6.0500 = US \$1 And US \$ 1 = RS. 41.2650 Therefore, FRF 6.0500 = US \$ 1 = RS. 41.2650 So, FRF 1 = RS.41.2650/6.0500 = RS. 6.8206 In this way, banks can calculate exchange rate between any two currencies.
Hey sunanda nice post,

Here I am sharing Cross-Section Study on Structural Factors Affecting Exchange Rate Volatility, so please download and check it.
Attached Files
 Cross-Section Study on Structural Factors Affecting Exchange Rate Volatility.pdf (234.1 KB, 0 views)
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