DEFINITION of 'Cross Currency'
A pair of currencies traded in forex that does not include the U.S. dollar. One foreign currency is traded for another without having to first exchange the currencies into American dollars.
BREAKING DOWN 'Cross Currency'
Historically, an individual who wished to exchange a sum of money
into a different currency would be required to first convert that money
into U.S dollars, and then convert it into the desired currency; cross
currencies help individuals and traders
bypass this step. The GBP/JPY cross, for example, was invented to help
individuals in England and Japan who wanted to convert their money
directly without having to first convert it into U.S dollars.