Конвертация На Форексе

What Is Cross Currency Triangulation?

Cross currency triangulation is the process where one currency is converted to another via a third common currency. The major significance of cross-currency triangulations—in which foreign money exchanges do not involve the U.S. dollar—results from the fact that many currencies are not typically traded against each other in the interbank market.

Understanding Cross Currency Triangulation

Major companies, importers and exporters, governments, investors, and tourists, all needed a method to simultaneously transact business in euros while allowing for money and profits to repatriate back to their home currencies. With a realignment of the currency markets due to the adoption of the euro, cross-currency pairs such as the EUR/JPY, GBP/CHF, GBP/JPY, and EUR/GBP, as well as many other cross-currency pairs, developed over time, for many reasons.

Notice that none of the base currencies in the pairs listed above is a nation that has adopted the Maastricht Treaty and thus rejected the adoption of the euro. With the European Union's implementation of Rule /97 on Sept. 11, , formal legality existed for calculating conversions to euros. This rule also established convertibility to six decimal places (rather than just three) and the adoption of triangulation as the legal norm for transacting business in the eurozone. This legality gave investors, traders, and bankers a new means to trade currencies, with a whole host of new profit opportunities.

Before triangulation existed, a company in the U.K. selling products in Switzerland and receiving Swiss francs had to sell Swiss francs for U.S. dollars and then sell U.S. dollars for British pounds. Before cross currencies existed, repatriations occurred by triangulating pairs with U.S. dollars. Therefore, triangulation with crosses gave us the means to take advantage of the bid-ask spreads in the interbank market.

On a daily basis, well-capitalized investors and traders can always find discrepancies between bid-ask spreads through the many cross pairs that exist today, thanks to the inclusion of euros. Although these arbitrage opportunities may last for mere seconds, many capitalize on these differences to turn a profit. Fortunately, computers linked directly to the interbank market can easily meet this challenge and profit through bid-ask spreads around the world from banks that make markets in currencies.

The cross rate should equal the ratio of the two corresponding pairs. Therefore, EUR/GBP = EUR/USD divided by GBP/USD, just like GBP/CHF = GBP/USD x USD/CHF.

The basic formula always works like this:

A/B ÷ C/B = A/C

-or-

A/B * B/C = A/C

For example, suppose we know the bid and offer of AUD/USD and NZD/USD, and we want to profit from AUD/NZD.

AUD/NZD bid = AUD/USD bid divided by NZD/USD offer
AUD/NZD offer = AUD/USD offer divided by NZD/USD bid

The product of the rate through the bid-ask spread will determine whether a profit opportunity exists.

Three-Pair Triangulation Example

Suppose that we have a three-pair triangulation opportunity such as GBP/CHF, EUR/GBP, and EUR/CHF, in which GBP/CHF is quoted from EUR/GBP and EUR/CHF. Notice the base currencies within EUR/GBP and EUR/CHF; they equal the GBP/CHF, but we must make our euro conversions in order to achieve our objective.

GBP/CHF bid = EUR/CHF bid divided by EUR/GBP offer = a certain rate
GBP/CHF offer = EUR/CHF offer divided by EUR/GBP bid = a certain rate calculated in euros

Whether you earned a profit in this example would depend on exchange rates. Notice the conversion of euros from GBPs and CHFs; triangulating currencies usually involves either euro or U.S. dollar conversions.

Triangulation With U.S. Dollar Example

Most U.S. dollar (USD) pairs will hold the USD as the base currency. However, the pair could also be quoted as a European or reciprocal quotation, and the USD would not be considered the base.

Suppose we triangulate a U.S. dollar conversion from CHF/JPY; CHF/JPY is simply USD/CHF and USD/JPY. The bid equals the division of the bid of the cross rate terms currency (top) by the offer of the base (bottom). To find the offer, divide the offer of the terms currency by the bid of the base.

If the USD/CHF rate is and JPY/USD is , then for a CHF/JPY cross rate, the bid would be multiplied by or JPY/CHF; the offer would be multiplied by or JPY/CHF.

Triangulation Uses

In most instances, triangulation involves profiting from exchange rate disparities. This can be accomplished in many ways. For example, suppose you institute two buys on a certain pair and one sell, or you sell two pairs and buy one pair. Any number of triangulation opportunities exist every day from banks in Tokyo, London, New York, Singapore, Australia, and all the places in between. These same opportunities may exist around the world, trading the exact same pair. The most popular triangular opportunities are usually found with the CHF, EUR, GBP, JPY, and U.S. dollars, in order to convert from euros to home currencies.

What is noticeable, more and more, is that many brokers, including retail currency brokers, are including cross currency pairs in their dealing rates section of their trade stations. One can now trade the GBP/USD as easily as the USD/GBP, and the EUR/USD as easily as the USD/EUR. The difference between the interbank market and the retail side of trading is the spot market. Many may want to transact their business through the spot market where they know their trade will be executed because prices in the interbank market are so ephemeral.

Traders can easily transact any triangular arbitrage opportunities with two or three currency pairs crossed by many nations, as well as take advantage of any other bid-ask spread opportunities. For the small retail trader with limited funds, this would probably work. However, for the well-capitalized trader, it may not work because the spot market doesn't always reflect exact exchange rates. Larger traders may have to wait on certain spot prices before transacting their business—a wait they may not be willing to risk when it comes to profits.

Many opportunities exist for the arbitrage and triangular traders, that don't always include exchange rate arbitrages. Traders may want to capitalize on merger and acquisition opportunities through the currency markets, swap trades, forward trades, yield curve trades, and options trades. The same opportunities exist for each one of these markets. 

ISTANBUL, Jan 26 (Reuters) - Turkey's central bank said on Thursday it would provide foreign exchange conversion support to companies that bring in foreign currency from abroad, including exporters and tourism firms.

Firms can benefit from a 2% discount as conversion support when converting foreign currency from abroad if they pledge not to buy foreign currency for a period determined by the bank and deposit the remaining amount to conversion accounts as part of a scheme to protect lira deposits against forex depreciation, according to the central bank.

Analysts have voiced concern that the practice could create a separate FX conversion rate to the trading rate in the free market.

But Central Bank Governor Sahap Kavcioglu dismissed this criticism when asked about it at a presentation on Thursday.

"We don't have dual foreign exchange rate, we are just encouraging foreign currency resources from abroadI do not agree with this interpretation of the practice," he said.

"There is no different foreign exchange rate application in Turkey, the FX rates at the banks are the same to the exporters," Kavcioglu added.

As part of its so-called liraization strategy, the central bank has taken several measures to revive interest in currency, after years of depreciation and high and volatile inflation sent Turks seeking safer places for their savings.

These steps, as well as lira stability in the last several months thanks partly to indirect forex sales to the market, helped cut share of foreign currencies to around 46% of total bank deposits compared to some 65% a year ago.

The latest steps are expected to further ensure a stable course in foreign exchange rates.

Last week, the central bank set the remuneration rate on foreign currency free reserve accounts at %, establishing a remuneration rate for lenders who hold forex free reserve accounts in the country.

Separately, the central bank removed a 12% maximum interest rate limit on lira deposits converted from foreign currencies, in a move that is aimed at attracting more fx holders to turn to lira with higher rates.

Our Standards: The Thomson Reuters Trust Principles., opens new tab

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An exchange rate is how much it costs to exchange one currency for another. Exchange rates fluctuate constantly throughout the week as currencies are actively traded. This pushes the price up and down, similar to other assets such as gold or stocks.

The market price of a currency—how many U.S. dollars it takes to buy a Canadian dollar for example—is different than the rate you will receive from your bank when you exchange currency. It is often a key element of financial trilemmas.

Here's how exchange rates work, and how to figure out if you are getting a good deal.

Finding Market Exchange Rates

Traders and institutions buy and sell currencies 24 hours a day during the week. For a trade to occur, one currency must be exchanged for another. To buy British Pounds (GBP), another currency must be used to buy it. Whatever currency is used will create a currency pair. If U.S. dollars (USD) are used to buy GBP, the exchange rate is for the GBP/USD pair. Access to these forex (foreign exchange) markets can be found through any of the major forex brokers.

Reading an Exchange Rate

If the USD/CAD currency pair is , that means it costs Canadian dollars to get 1 U.S. dollar. In USD/CAD, the first currency listed (USD) always stands for one unit of that currency; the exchange rate shows how much of the second currency (CAD) is needed to purchase that one unit of the first (USD).

This rate tells you how much it costs to buy one U.S. dollar using Canadian dollars. To find out how much it costs to buy one Canadian dollar using U.S. dollars, use the following formula: 1/exchange rate:

1 / =

It costs U.S. dollars to buy one Canadian dollar. This price would be reflected by the CAD/USD pair. In this instance, the position of the currencies has switched.

Some of the most popular currencies that trade against the U.S. dollar are the Euro (EUR/USD), the Japanese Yen (USD/JPY), the British Pound (GBP/USD), the Swiss Franc (USD/CHF), the Australian Dollar (USD/AUD), the New Zealand Dollar (USD/NZD), and the Canadian dollar (USD/CAD).

Conversion Spreads

When you go to the bank to convert currencies, you most likely won't get the market price that traders get. The bank or currency exchange house will markup the price so they make a profit. Credit cards and payment service providers such as PayPal will also do this when converting currencies.

If the USD/CAD price is , the market is saying it costs Canadian dollars to buy 1 U.S. dollar. At the bank though, it may cost  Canadian dollars. The difference between the market exchange rate and the exchange rate they charge is the bank's profit. To calculate the percentage discrepancy, take the difference between the two exchange rates, and divide it by the market exchange rate:

(( - )/)* = 3% markup

A markup will also be present if converting U.S. dollars to Canadian dollars. If the CAD/USD exchange rate is (see the section above), then the bank may charge They are charging you more U.S. dollars than the market rate:

(( - )/)* = 3% markup

Banks and currency exchanges compensate themselves for this service. The bank gives you cash, whereas traders in the market do not deal in cash. In order to get cash, wire fees and processing or withdrawal fees would be applied to a forex account in case the investor needs the money physically.

In most cases, someone converting currencies wants to get the cash instantly and with as few fees as possible. Paying a markup to a bank or credit card company is a worthwhile compromise.

If you are converting one currency to another, shop around for an exchange rate that is closer to the market exchange rate; it can save you money. Some banks have ATM network alliances worldwide, offering customers a more favorable exchange rate when they withdraw funds from allied banks. 

Calculate Your Requirements

Need a foreign currency? Use exchange rates to determine how much foreign currency you want, and how much of your local currency you'll need to buy it.

If heading to Europe you'll need euros (EUR), and will need to check the EUR/USD exchange rate at your bank. The market rate may be , but an exchange might charge you or more. 

Assume you have $1, USD to buy Euros with. Divide $1, by (what a bank may charge) to get euros. That is how many Euros you get for your $1, Since Euros are more expensive, we know we have to divide, so that we end up with fewer units of EUR than units of USD.

Now assume you want 1, euros, and want to know what it costs in USD. Multiply 1, by to get 1, USD. Since we know Euros are more expensive, one euro will cost more than one US dollar, that is why we multiply in this case.

The Bottom Line

Exchange rates always apply to the cost of one currency relative to another. The order in which the pair are listed matters. Remember the first currency is always equal to one unit and the second currency is how much of that second currency it takes to buy one unit of the first currency. From there you can calculate your conversion requirements.

Banks will markup the price of currencies to compensate themselves for the service. Shopping around may save you some money as some companies will have a smaller markup, relative to the market exchange rate, than others.