Forex Quotation Illustration 10

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Consider the following quotes:

Spot (Euro/Pound) = 1.6543/1.6557

Spot (Pound/NZ $) = 0.2786/0.2800

i.   Calculate the percentage spread on the Euro/Pound rate.

ii.   Calculate the percentage spread on the Pound/NZ $ rate.

iii.   The maximum possible percentage spread on the cross rate between the Euro and the NZ $.

(Ans:   (i) % Spread (Euro/Pound) 0.0846%

(i)        % Spread (Pound/NZ $) 0.50%

(ii)      % Spread 0.5846 (Thus, maximum % spread is addition of two spreads).

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