Cross-Currency Transaction

DEFINITION of 'Cross-Currency Transaction'

A cross-currency transaction is one which involves the simultaneous buying and selling of two or more currencies. An example is the purchase of Canadian dollars with yen and the simultaneous sale of yen for U.S. dollars. The term is also used generically for any transaction that involves more than one currency, such as a currency swap.

BREAKING DOWN 'Cross-Currency Transaction'

Cross currency transactions are most common for multinational corporations or international bond funds that manage or hedge their currency exposure. Sometimes all the transactions are effected in one country without the use of that country's currency, which is referred to as a currency cross.

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RELATED FAQS
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    Read about the benefits of engaging in a currency swap, such as when companies in different countries want to borrow funds ... Read Answer >>
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    There is no such thing as a world currency. However, since World War II, the dominant or reserve currency of the world has ... Read Answer >>
  4. How often do exchange rates fluctuate?

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