Cross Currency

Cross Currency

In foreign exchange, two currencies that are exchanged without first converting one or the other into United States dollars. At the end of World War II, most currencies were pegged to the dollar as the United States was the only major country to come out of the war with little damage. This meant that confidence in the dollar was strong, especially since it was also pegged to gold. Since then, currencies have begun to be traded without reference to the dollar; these are known as cross currencies. See also: Bretton Woods.