Ready rates based on cross rates

Ready rates based on cross rates refer to the exchange rates between two currencies that are not commonly traded in the foreign exchange market. Cross rates are calculated by using the exchange rates of two widely traded currencies to determine the exchange rate between the less commonly traded currencies.

For example, suppose a company needs to exchange Canadian dollars (CAD) for Japanese yen (JPY), but there is no direct exchange rate quoted in the market. Instead, the company can calculate the cross rate by first converting CAD to US dollars (USD) and then converting USD to JPY. This would be done using the current exchange rates for CAD/USD and USD/JPY to determine the exchange rate for CAD/JPY.

Ready rates based on cross rates refer to the exchange rates that financial institutions quote for these less commonly traded currency pairs. These rates are typically quoted on a “ready” basis, meaning they are immediately available for execution without any additional processing time.

In addition to cross rates, ready rates may also be based on other types of exchange rates, such as spot rates or forward rates. The type of rate used will depend on the specific needs of the transaction and the currencies involved.

Overall, ready rates based on cross rates play an important role in international trade and finance, allowing companies to efficiently exchange less commonly traded currencies and manage their foreign exchange risks.