Question

For the exchange rate of £/USD assume that estimates were not available. Describe a process for producing such estimates

Answer 1

If direct exchange rates are not available for a currency (in our case £/USD ), in that case ww can compute the exchange rates using cross rates or Indirect Quote method.

Indirect Quote method or Cross rates is a process where exchange rates between two currencies is determined using the exchange rates of those currencies with respect to other currencies.

For example-

Let us assume, "USD = 76 INR" and "£ = 92 INR" and We have to find "USD/£"

USD/£ = 76 INR / 92 INR

USD / £ = 0.826

Incase of any doubt, please comment below. I would be happy to help.