Cross-Currency Transaction

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  2. Cross-Currency Settlement Risk

    A type of settlement risk in which a party involved in a foreign ...
  3. Cross-Currency Swap

    An agreement between two parties to exchange interest payments ...
  4. Commodity Pairs

    The three forex pairs which include currencies from countries ...
  5. Currency

    A generally accepted form of money, including coins and paper ...
  6. Forex - FX

    The market in which currencies are traded. The forex market is ...
Related Articles
  1. Broadening Your Portfolio's Borders
    Investing Basics

    Broadening Your Portfolio's Borders

  2. The Impact Of Currency Conversions
    Forex Education

    The Impact Of Currency Conversions

  3. Hedging Basics: What Is A Hedge?
    Options & Futures

    Hedging Basics: What Is A Hedge?

  4. An Introduction To Swaps
    Options & Futures

    An Introduction To Swaps

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center