Cross Currency Prediction Calculator
Calculate cross currency rates (like EUR/TRY or GBP/TRY) using Base/USD and USD/TRY values. Predict future cross rates with your own forecasts.
Cross Currency Rates Explained
A cross currency rate (or cross rate) is the exchange rate between two currencies, neither of which is the US dollar. Since the US dollar serves as the world's primary reserve currency and is the most widely traded currency in foreign exchange markets, most currency pairs are quoted against the dollar. When you need to determine the exchange rate between two non-dollar currencies, such as EUR/TRY (Euro to Turkish Lira) or GBP/JPY (British Pound to Japanese Yen), you calculate the cross rate by using each currency's rate against the dollar as an intermediary. For example, if EUR/USD is 1.10 and USD/TRY is 30.00, then EUR/TRY equals 1.10 multiplied by 30.00, which is 33.00.
Cross rates are essential for international businesses, travelers, and forex traders who need to transact between currencies that do not have a direct, liquid market with each other. In the interbank foreign exchange market, cross rates are continuously calculated from the underlying dollar-based rates. Any discrepancy between the calculated cross rate and the actual quoted market rate can create a temporary profit opportunity known as triangular arbitrage.
Triangular Arbitrage and Currency Pairs
Triangular arbitrage is a strategy that exploits pricing inconsistencies among three currencies. If the implied cross rate between EUR and TRY (derived from EUR/USD and USD/TRY) differs from the directly quoted EUR/TRY rate on an exchange, a trader could theoretically execute a series of three trades to lock in a risk-free profit. In practice, such opportunities are extremely short-lived because automated trading systems detect and exploit them within milliseconds, quickly restoring equilibrium. However, understanding triangular arbitrage helps explain why cross rates remain consistent across global markets.
Currency pairs are classified into three categories: major pairs, which always include the US dollar paired with highly liquid currencies like the Euro, Yen, Pound, or Swiss Franc; minor pairs (or cross pairs), which involve two major currencies but exclude the dollar, such as EUR/GBP or AUD/JPY; and exotic pairs, which pair a major currency with a currency from a smaller or emerging-market economy, such as USD/TRY, EUR/ZAR, or GBP/MXN. Exotic pairs typically have wider spreads, lower liquidity, and higher volatility compared to major and minor pairs.
Factors Affecting Exchange Rates
Exchange rates are driven by a complex interplay of macroeconomic, political, and market factors. Interest rate differentials between countries are among the most influential drivers. When a country raises its interest rates, its currency tends to strengthen because higher rates attract foreign capital seeking better returns. Inflation rates matter as well; countries with consistently lower inflation see their currencies appreciate over time because purchasing power erodes more slowly. Trade balances, government debt levels, political stability, and central bank monetary policies all play significant roles in determining the direction and magnitude of currency movements.
For emerging-market currencies like the Turkish Lira, additional factors such as foreign investor sentiment, commodity price fluctuations, and geopolitical risk can cause outsized volatility. Currency prediction is inherently challenging because these factors interact in unpredictable ways, and market sentiment can shift rapidly in response to news events. Using this calculator to model different scenarios can help you understand how changes in one exchange rate ripple through to cross-currency valuations.
Important Disclaimer
This calculator is provided for educational and informational purposes only and does not constitute financial, tax, or investment advice. Foreign exchange trading involves substantial risk of loss and is not suitable for all investors. Exchange rates fluctuate continuously and the rates shown here are indicative only. Always consult a qualified financial advisor before making decisions related to currency trading or international investments.