Chương 1. TCQT

TÀI CHÍNH QUỐC TẾ
INTERNATIONAL TRADE FINANCING DIVISION

Senior Lecturer: Assos.Prof. Doan Ngoc Thang
Email: [email protected]
Phone: 0989142988
1
Why we study international finance?
• Career goals: international investment, international banking

• International trade and international capital investment
• Exchange rate, relationship between exchange rates and macro
variables (interest rates, inflation, ...)
• Benefits vs. Risks from international trade
1
3
Outlines
• Chapter 1: International financial market

• Chapter 2: Balance of payment
• Chapter 3: Exchange rate regime
• Chapter 4: Theory of purchasing power parity
• Chapter 5: Theory of interest rate parity
2
Textbook
• Paul R. Krugman, Maurice Obstfeld & Marc J.

Melitz (2018), International Finance: Theory and
Policy 11th Edition, Pearson, London.
Class rules
• Notebook: 1 for noting and 1 for doing HW

• Classwork & Homework
• Working in individual vs group
3
CHAPTER 1:
INTERNATIONAL FINANCIAL
MARKET
Outlines
OVERVIEW OF INTERNATIONAL
FINANCIAL MARKET
FOREIGN EXCHANGE MARKET
4
NATURE OF INTERNATIONAL
FINANCIAL MARKETS
History: international trade and investment
Definition: market for lending – borrowing and

selling – buying financial assets across
countries
STRUCTURE OF FINANCIAL MARKETS
INTERNATIONAL
INTERNATIONAL
CAPITAL
MONEY MARKET
MARKET
INTERNATIONAL
Eurocurrency STOCK MARKET
Euronotes
INTERNATIONAL
BOND MARKET
Euro CP
FOREIGN
EXCHANGE
MARKET
10
10
5
Global Capital Markets
Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved
11
Structure of the Foreign Exchange

Market
• The Global Trading Day
– The foreign exchange market spans the globe, with
currencies trading somewhere every hour of every
business day
12
6
Global Currency Trading: The Trading
Day
13
Global Financial Centres Index (2022)
14
7
FOREIGN EXCHANGE MARKET (FX MARKET)
1. An overview of the foreign exchange

market
2. Basics of foreign exchange trading
3. Foreign exchange position and
exchange rate risks
15
AN OVERVIEW OF
THE FX MARKET
16
8
Foreign exchange includes all
payment instruments that are used
in international settlements
17
18
9
COMPONENTS OF FX
• Foreign currencies
• Financial instruments denominated
in foreign currencies
• International Standard Gold
• Domestic currency held by non-
residents
19
Foreign currency
The currency of other countries or the EUR
and other official currencies (of a zone) used in
regional and international settlements
(including the Special Drawing Right - SDR).
20
10
was created by IMF in 1969
serving as reserve assets

Used in credit transaction or in the balance of trade
between nations
based on a basket of five major

currencies— USD, EUR, CNY, JPY, GBP
21
22
11
International standard gold
•Gold used in international settlements

•Characteristics:
• In the form of pieces or bars
• Having quality of 99.5%+
• Weigh 1kg+
• Bearing hallmarks of gold manufacturers
recognized by international gold associations
and gold trading centers
23
Residents vs. Non-residents
Residency period lasts

at least 12 months
Resident
Have income from the
resident country
Nonresidents are those who do no satisfy either

of the above conditions
24
12
Domestic currencies held by non-residents
Which one is FX of Vietnam:
•A British man is working in a Vietnamese
enterprise for 2 years and have account in BIDV
Ha Thanh denominated 2 billion VND
• A Lao student at BAV holds 10m VND.
•An overseas Vietnamese hold two accounts in
Vietcombank: one is denominated in VND, the
other is in USD.
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FOREX MARKET
26
13
Buy
Sell
Anywhere
currencies
Sell
Buy
Sell
Buy
are bought
and sold
Buy
Sell
27
Buy
Sell
Interbank
Sell
market
Buy
Buy
Sell
Sell
Buy
28
14
Broad • Any place where currencies
meaning are bought and sold against
others
FOREX
Narrow • The foreign exchange
meaning Interbank market
29
Characteristics of Forex
1
Space market
2 Non-stop global market
3 Commercial banks are main players
4 Trade and contact via communication network
5 Most Liquid Market in the World
6 Extremely sensitive to political, social,…events
7 USD is the most commonly used currency
30
15
FOREX = 100%
Non – Interbank
15%
Interbank
85% Customer -
Bank –
Customer Customer
14% 1%
Role of Banks = 99%
31
Main functions of FOREX market

1. Serve the international trade
activities
2. Facilitate international capital
movements
3. Place to determine exchange
rates
4. Place where Central Banks
directly intervene in exchange rates
5. Provide trading environment and

hedging instruments
32
16
Exhibit 5.2 Evolution of the Modern
Currency Trading Marketplace
33

Market (5 of 8)
• The Evolution of FX Trading
– 1985
▪ Limited price discovery capability
▪ Trades conducted over the phone
– 1990’s
▪ Instantaneous access to market data via computer
▪ Market only accessible by intermarket dealers
– 2010
▪ Trades are conducted electronically
▪ Separation of the interdealer and customer markets has
effectively broken down
34
17
Exhibit 5.4 The Foreign Exchange
Market Today
35

Market (6 of 8)
• The Three Components of FX Trades
– The foreign exchange trade transaction agreement—
the interaction of dealers, brokers, and aggregators
– Electronic communication and notification for
payment settlement
– Final settlement of the currency trade
36
18
Transactions in the Foreign Exchange
Market (1 of 6)
• Spot Transactions
– The purchase of foreign exchange with delivery and payment between
banks taking place normally on the second following business day.
– Value Date
▪ The date of settlement
– Clearing House Interbank Payments System (CHIPS)
▪ Most dollar transactions in the world are settled through the
computerized CHIPS in New York
▪ Calculates net balances owed by any one bank to another and
which facilitates payment of those balances by 6:00 p.m. that
same day in Federal Reserve Bank of New York funds
37
Foreign Exchange Transactions and

Settlements
38
19
Market (2 of 6)
• Forward Transactions aka Outright Forward
Transactions
– Requires delivery at a future value date of a
specified amount of one currency for a specified
amount of another currency
– The exchange rate is established at the time of the
agreement, but payment and delivery are not
required until maturity
39

Market (3 of 6)
• Swap Transactions
– Spot Against Forward
▪ A dealer buys a currency in the spot market and simultaneously sells the same
amount back to the same bank in the forward market
– Forward-Forward Swaps
▪ Example: A dealer sells £20,000,000 forward for dollars for delivery in two
months at $1.8420/£ and simultaneously buys £20,000,000 forward for delivery
in three months at $1.8400/£
▪ This swap can be viewed as a technique for borrowing another currency on a
fully collateralized basis
– Nondeliverable Forwards (NDFs)
▪ Possess the same characteristics and documentation requirements as traditional
forward contracts, except that they are settled only in U.S. dollars
▪ The foreign currency being sold forward or bought forward is not delivered
40
20
Transactions in the Foreign Exchange Market
(4 of 6)
• Size of the Foreign Exchange Market

– A 2016 survey estimated daily global net turnover
in the foreign exchange market to be $5.1 trillion, a
5% decline from its peak in 2013
41
Exhibit 5.6 Global Foreign Exchange

Market Turnover, 1989–2016
42
21
Market (5 of 6)
• Geographical Distribution
– London continues to be the world’s major foreign
exchange market in traditional foreign exchange
market activity with 37% of the global market,
followed by the New York with 19%
– Currency trading in Asia is growing due to the
growth of the Asian economies, markets, and
currencies
43
Exhibit 5.7 Top 6 Geographic Trading Centers

in the FX Market
44
22
Market (6 of 6)
• Currency Composition
– The currency composition of trading indicates a
number of global shifts
▪ The U.S. dollar increased its presence in global
currency trades
▪ The Japanese yen and the European euro both
showed declines
▪ The Chinese renminbi’s proportion, although
small, has recently doubled
45
Daily FX Trading by Currency Pair

(percent of total) (1 of 2)
46
23
Daily FX Trading by Currency Pair
(percent of total) (2 of 2)
47
FUTURE
 a standardized forward contract, a legal

agreement to buy or sell something at a
predetermined price at a specified time in the
future
 The predetermined price the parties agree to buy
and sell the asset for is known as the forward
price.
 The specified time in the future—which is when
delivery and payment occur—is known as the
delivery date.
 Value date: (T+n)+2 (n: the contract tenor)
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48
24
OPTION
 an agreement between a buyer and seller that

gives the purchaser of the option the right to
buy or sell a particular asset at a later date at
an agreed upon price
 Two types: call option and put option
 Value date: (T+n)+2 (n: the contract tenor)
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PARTICIPANTS IN FOREX MARKET

Retail clients
Commercial banks
Foreign exchange brokers
Central Banks
Consultants
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25
Retailers
This group includes the local and foreign
citizens wishing to buy/sell foreign currencies
on the foreign exchange market to cater for
investment, lending, business trip or travelling
or when receiving investment profits or
transfers in form of foreign currencies
• Retail customers rarely transact with each
other due to the costs incurred relating to:
time, location, quantity and payment risks...
51
Commercial Banks
Commercial Banks participate FOREX

market to perform 2 tasks:
- Trading: arbitrage trading and
speculation
- Providing services to customers: “Buy
low – Sell high’’
Commercial banks use 2 types of rate:
Wholesale and Retail
52
26
Central Banks
Central Bank participates to perform 3 main
tasks:
- Supervise and intervene to influence the
level of the exchange rate by buying/selling
the domestic currency
- Buying/selling, converting currencies in order
to change the structure of the foreign reserves
- Buying/selling on behalf of the government
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Brokers
•Brokers execute orders to buy and/or sell

foreign currencies at the request of
customers to earn fees.
• Brokers must have a proper license and
only provide brokerage services rather
than trade for himself.
54
27
55
* BASICS OF FOREIGN EXCHANGE DEALING
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1. Exchange rate
• 1USD = 23,260VND
Exchange rate (E) is
the price of one • Commodity - C
currency expressed in
terms of another • Term - T
currency
• Quoting bank
• Asking bank
56
56
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Exchange rate
1USD = 23,260 – 23,380 VND

* Spot exchange rate
* Two-way quotation
* Bid rate: 23,260
* Off rate: 23,380
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59
60
60
30
Commodity Foreign currency
1 kg rice
1 USD
1 cow
1 SGD
1 Int’l
Finance 1 GBP
book
1 laptop 1 EUR
Direct (Price)
quotation
61
Commodity Foreign Currency
? Kg rice
? USD
? cow
? SGD
1 Int’l
Finance ? GBP
book
? laptop ? EUR
Indirect (Volume)
quotation
62
31
Direct quotation
Is quotation method from the perspective of a

country, in which:
- Foreign currency, acting as commodity, is

Commodity Currency and has fixed unit (ONE)
- Local currency, acting as money, is Terms

Currency and has changeable unit (variations
according to S-D law in Forex market)
63
Indirect quotation
Is quotation method from the perspective of a

country, in which:
- Local currency, acting as commodity, is

Commodity Currency and has fixed unit (ONE)
- Foreign currency, acting as money, is Terms

Currency and has unstable unit (variation
according to S-D law in Forex market)
64
32
In the Interbank market, all currencies are
quoted against USD, in which
 USD is terms currency in relation to the

group of five currencies GBP, AUD, NZD,
EUR, SDR
 USD is commodity currency in relation to

the remaining currencies
65
 In practice
Bid – Ask
Ex: 1USD =23,350VND  USD/VND =23,350
 In academics
Bid - Ask
Ex: 1USD =23,350VND  VND/USD =23,350
66
33
Point
A point always refers to one unit of the last digit of a

conventional quotation
1 EUR = 1.1238 USD => 1 point = 0.0001 USD

1 GBP = 1.3026 USD => 1 point = … USD
1 AUD = 0.7071 USD => 1 point = … USD
1 NZD = 0.6066 USD => 1 point = … USD
1 SDR = 1.3859 USD => 1 point = … USD
1 USD = 109.62 JPY => 1 point = … JPY
1 USD = 23,260 VND => 1 point = 1 VND
67
67
What about the number

of digits used in the
reciprocal quotes?
=
The number of digits
before the decimal
point in the regular
quotes plus 3
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34
3. Spread
Absolute form:
Spread = Offer rate – Bid rate
Relative form:
Offer – Bid
Spread = ∗ 𝟏𝟎𝟎%
Bid
Spread depends on:
 The amount of the currency dealt
 The size or reputation of financial centers
 The volatility of currencies
 The frequencies of currencies in transaction
 Means of transaction: paper notes, credit cards, bank
transfers, …
69
69
4. Cross rates and cross rates trading
 Cross rates
 Definition
 Reasons behind calculating cross rates
 How to calculate cross rates?
70
35
Why to calculate
cross rates?
71
Definition:
Broad meaning Narrow meaning

The exchange rate - The exchange
between two types rate between
of currencies two types of
computed by currencies
reference to a computed by
third currency reference USD
72
36
How to calculate:
Case 1: USD plays the role as the commodity
currency in both of the exchange rates
Case 2: USD plays the role as the

commodity currency and terms currency
Case 3: USD plays the role as the terms

currency in both of the exchange rates
73
USD is commodity currency
E(USD/VND) = (a,b)
E(USD/SGD) = (c,d)
E(SGD/VND) = (x,y)
74
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37
75
75
Client Bank Exchange rate

SGD USD
1 USD = d SGD
Sell Sell
USD VND
1 USD = a VND
Sell Sell
VND d SGD = a VND
Buy 1 SGD = a/d VND
76
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38
y

VND USD
1 USD = b VND
Sell Sell
USD SGD
1 USD = c SGD
Sell Sell
SGD c SGD = b VND
Buy 1 SGD = b/c VND
77
77
USD is commodity currency as well as term currency
E(USD/VND) = (a,b)
E(GBP/USD) = (c,d)
E(GBP/VND) = (x,y)
78
78
39
x

GBP USD
1 GBP = c USD
Sell Sell
USD VND
1 USD = a VND
Sell Sell
VND
1 GBP = a*c VND
Buy
79
79

VND USD
1 USD = b VND
Sell Sell
USD GBP
1 GBP = d USD
Sell Sell
GBP
1 GBP = b*d VND
Buy
80
80
40
USD is term currency
E(AUD/USD) = (a,b)
E(GBP/USD) = (c,d)
E(GBP/AUD) = (x,y)
81
81

GBP USD
1 GBP = c USD
Sell Sell
USD AUD
1 AUD = b USD
Sell Sell
AUD 1 USD = 1/b AUD

Sell 1 GBP = c/b AUD
82
82
41
y

AUD USD
1 AUD = a USD
Sell Sell
USD GBP
1 GBP = d USD
Sell Sell
GBP 1 USD= 1/a AUD

Sell 1 GBP= d/a AUD
83
83
Profits and losses in FX trading
• Profits and losses are generated from buying and

selling different currencies at the different rates.
• Quoting banks always make profits
• Asking banks always suffer losses
84
42
Flow Exchange
Direction
USD (C) VND (T) rate
Buy USD (C) +1 -23,260 23,260
Sell USD (C) -1 +23,380 23,380
Profits 0 +120
E(USD/VND) = 23,260 – 23,380 85
85
Flow Exchange
Direction
Buy VND (T) -4.2772 +100,000 23,380
Sell VND (T) +4.2992 -100,000 23,260
Profits +0.0220 0
E(USD/VND) = 23,260 – 23,380 86
86
43
Exchange
Direction
Buy USD (C) +1 -23,380 23,380
Sell USD (C) -1 +23,260 23,260
Loss 0 -120
E(USD/VND) = 23,260 – 23,380 87
87
Exchange
Direction
Buy VND (T) -4.2992 +100,000 23,260
Sell VND (T) +4.2772 -100,000 23,380
Loss -0.0424 0
E(USD/VND) = 23,260– 23,380 88
88
44
Question 1
For the following market parameters:

Reuter:
E (USD / JPY) = 121.31 - 121.42
E (USD / VND) = 21,678 - 21,689
Commercial Bank X:
E (JPY / VND) = 178.81 - 178.89
Question:
1) Calculate the cross rate E (JPY/VND) according to market parameters using
the table of transactions method and the method of quick calculation.
2) What is the arbitrage opportunity?
3) Show business results by drawing a table of cash flow.
4) What happens when the exchange rate arbitrators comes into play?
89
Question 2
For the following parameters:
Reuter:
E (USD / VND) = 21,510 - 21,520
E (EUR / USD) = 1,3185 - 1,3190
Bank X:
E (EUR / VND) = 28,350 - 28,357
Question:
1) Calculate the cross exchange rate E (EUR/VND) according to market
parameters using the table of transaction method and the quick calculation
method.
2) What is the arbitrage opportunity?
3) Show business results by drawing a table of cash flow.
4) What happens when the exchange rate arbitrators comes into play?
90
45
Question 3:
Thang Long Import-Export Company will receive 170 million JPY
from exporting goods to Japan and have to pay SGD 1.6 million for
imported goods. Parameters on the forex market:
In Hanoi: USD / VND = 21,695-21,703
In Singapore: USD / SGD = 1.2647-1,2653
In Tokyo: USD / JPY = 121.12-121.19
Question:
1) Calculate cross rates SGD/VND, JPY/VND and SGD/JPY?
2) Show the options for calculating the company's income in VND?
3) As an import-export trader, which option would you choose?
Why?
91
Question 5
Import-export firm simultaneously receives 50,000 EUR from

exporting goods to the EU market and has to pay 100,000 AUD for
imported goods. Parameters on the forex market:
AUD/USD = 0.6714-0.6723
EUR/USD = 1.1612-1,1622
USD/VND = 21,437-21,448
Question:
a) Calculate cross rates AUD/VND, EUR/VND and EUR/AUD?
b) Presenting options for calculating the company's income in VND?
c) As an import-export trader, which option would you choose? Why?
92
46
BORKER’S RATE
USD/JPY
Buying Bid Ask Selling

orders order
A 75,32 75,80 a
B 75,40 75,72 b
C 75,48 75,68 c
D 75,63 75,63 d
Broker’s rate 75,48 75,68
93
Rules for setting up broker’s rates:

•A bank could place either selling order or
buying order, or both.
•Bids are always lower than or equal to Asks.
•In case bid placed meets offer placed, the
broker match these orders and receives
commission.
•Broker’s rate (inside rate):
•Bid is the highest of all bids
•Ask is the lowest of all Asks
94
47
ARBITRAGE
• Definition: buying a security in one market and
simultaneously selling it in another market at a higher
price, profiting from a temporary difference in prices
• Steps of conducting arbitrage
Select the lowest bid (Bid min) from the perspective of
Asking bank
Select the highest ask/offer (Ask/Offer max) from the
perspective of Asking bank
If Bid min < Ask max  Arbitrage takes place
Ex: Paris: EUR/USD = 1,3456 – 1,3478

London: EUR/ USD = 1,3482 – 1,3486
95
Operations EUR USD
Buy EUR in Paris +1 - 1,3478
Sell EUR in London -1 + 1,3482
Arbitrage 0 +0,0004
96
48
SPECULATION
• Definition: buying and selling the foreign currency under

the conditions of uncertainty with a view to earning huge
gains.
• Often, the speculators buy the currency when it is weak and
sells when it is strong.
• If the spot rate of the currency is expected to increase, then
the speculator buys forward and sell “on the spot” the
currency
• If the spot rate of the currency is expected to decline, then
the speculator sells forward and buy “on the spot” the
currency
97
98
98
49
1 Trạng thái nguyên tệ của 1 ngoại tệ
• Chênh lệch giữa tổng TSC và tổng TSN của ngoại tệ này,
bao gồm cả các cam kết ngoại bảng tương ứng.
2 Trạng thái ngoại tệ của TCTD

• Trạng thái nguyên tệ của ngoại tệ đó được quy đổi sang
đồng Việt Nam theo tỷ giá quy đổi trạng thái.
3 Tỷ giá quy đổi trạng thái

• TG giữa VND và USD: là TG bình quân liên ngân hàng do Ngân
hàng Nhà nước công bố vào ngày báo cáo.
• TG giữa VND và các ngoại tệ khác: là TG bán giao ngay chuyển
khoản của TCTD, chi nhánh ngân hàng nước ngoài vào cuối
ngày báo cáo. 99
99
Trạng thái ngoại tệ
1 Tổng trạng thái ngoại tệ dương

• Tổng trạng thái các ngoại tệ có trạng thái dương
2 Tổng trạng thái ngoại tệ âm

• Tổng trạng thái các ngoại tệ có trạng thái âm
100
100
50
Nguyên tắc tính TTNT
Thông tư * Trạng thái ngoại tệ của TCTD, chi nhánh ngân

07/2012 hàng nước ngoài được xác định vào thời điểm
cuối ngày làm việc.
* Trạng thái nguyên tệ của ngoại tệ được tính trên

cơ sở số dư các tài khoản có liên quan theo quy
định
* Quy đổi trạng thái nguyên tệ của từng ngoại tệ

sang VND theo tỷ giá quy đổi trạng thái.
* Cộng các trạng thái ngoại tệ dương với nhau để

tính tổng trạng thái ngoại tệ dương. Cộng các
trạng thái ngoại tệ âm với nhau để tính tổng trạng
thái ngoại tệ âm
101
101
Giới hạn tổng trạng thái ngoại tệ

Giới hạn tổng trạng thái ngoại tệ được tính bằng tỷ lệ giữa tổng
trạng thái ngoại tệ dương hoặc tổng trạng thái ngoại tệ âm chia cho
vốn tự có của TCTD, CN ngân hàng nước ngoài
Tổng trạng thái ngoại tệ dương (âm) cuối ngày của các TCTD, CN
ngân hàng nước ngoài không được vượt quá 20% vốn tự có của
TCTD, CN ngân hàng nước ngoài
Các CN ngân hàng nước ngoài tại VN có vốn tự có từ 25 triệu USD
trở xuống được phép áp dụng mức giới hạn tổng trạng thái ngoại tệ
như sau: Tổng trạng thái ngoại tệ dương (âm) cuối ngày quy ra USD
không được vượt quá 5 triệu USD
Trường hợp cần thiết, TCTD, CN ngân hàng nước ngoài được duy
trì trạng thái ngoại tệ vượt giới hạn quy định khi được Thống đốc
Ngân hàng Nhà nước Việt Nam chấp thuận
102
102
51
Internet Exercises
1. International Capital Flows: Public and Private

Major multinational organizations (some of which are listed next) attempt to
track the relative movements and magnitudes of global capital investment.
Using these Web pages and others you may find, prepare a twopage executive
briefing on the question of whether capital generated in the industrialized
countries is finding its way to the less-developed and emerging markets. Is
there some critical distinction between “less-developed” and “emerging”?
• The World Bank www.worldbank.org
• OECD www.oecd.org
• European Bank for Reconstruction and Development www.ebrd.org
103
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TÀI CHÍNH QUỐC TẾ

INTERNATIONAL TRADE FINANCING DIVISION

Why we study international finance?

• Career goals: international investment, international banking

• Chapter 1: International financial market

• Paul R. Krugman, Maurice Obstfeld & Marc J.

• Notebook: 1 for noting and 1 for doing HW

FOREIGN EXCHANGE MARKET

History: international trade and investment

Definition: market for lending – borrowing and

STRUCTURE OF FINANCIAL MARKETS

Structure of the Foreign Exchange

Global Financial Centres Index (2022)

1. An overview of the foreign exchange

serving as reserve assets

based on a basket of five major

•Gold used in international settlements

Residents vs. Non-residents

Residency period lasts

Nonresidents are those who do no satisfy either

Role of Banks = 99%

Main functions of FOREX market

5. Provide trading environment and

Structure of the Foreign Exchange

Structure of the Foreign Exchange

Foreign Exchange Transactions and

Transactions in the Foreign Exchange

• Size of the Foreign Exchange Market

Exhibit 5.6 Global Foreign Exchange

Exhibit 5.7 Top 6 Geographic Trading Centers

Daily FX Trading by Currency Pair

 a standardized forward contract, a legal

 an agreement between a buyer and seller that

PARTICIPANTS IN FOREX MARKET

Foreign exchange brokers

Commercial Banks participate FOREX

•Brokers execute orders to buy and/or sell

* BASICS OF FOREIGN EXCHANGE DEALING

1USD = 23,260 – 23,380 VND

Commodity Foreign Currency

Is quotation method from the perspective of a

- Foreign currency, acting as commodity, is

- Local currency, acting as money, is Terms

Is quotation method from the perspective of a

- Local currency, acting as commodity, is

- Foreign currency, acting as money, is Terms

 USD is terms currency in relation to the

 USD is commodity currency in relation to

A point always refers to one unit of the last digit of a

1 EUR = 1.1238 USD => 1 point = 0.0001 USD

What about the number

4. Cross rates and cross rates trading

 Reasons behind calculating cross rates

 How to calculate cross rates?

Broad meaning Narrow meaning

Case 2: USD plays the role as the

Case 3: USD plays the role as the terms

USD is commodity currency

Client Bank Exchange rate

Client Bank Exchange rate