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When you buy currency this is the Bid Price. When you want to sell currency you are quoted the Ask Price. The difference between the buy and sell rate is the spread. The spread is how currency exchanges make their money (profit). The smaller the spread the lower the cost making narrow spreads better than wider spreads.

Buy or sell currency at bank beating exchange rates and no transfer fees with XE

Buy and Sell Rate (Bid and Ask rates)

The bid rate (buy rate) is always lower than the ask rate (sell rate). If you want you can think of the buy rate and sell rate as buying a car whereby you could buy it today for $20,000 whereas if you then wanted to sell it after a few days back to the same car sales company they would probably offer to buy it back for less than you bought it for. This is the concept of the spread and how currency exchanges make a profit from daily currency transactions.

What is the Mid-Market Rate?

The mid-market rate is the middle rate between the buy and sell rate. This is the exchange rate provided by www.exchange-rates.com. Some companies such as TransferWise aim to offer you exchange rates at the mid-market rate by matching buyers with sellers of currency.

Why do exchange rates differ between currency exchange companies?

Some companies such as airport Currency Exchange shops have to pay high property rental prices, staff and transport the cash between locations. These costs are passed on to the customer as higher worse exchange rates. If you compare airport exchange rate offers with currency brokers that operate online with no premises for you to visit you will find their exchange rates are more competitive. Therefore if you are transferred money you are best advised to plan ahead and order foreign currency online compared with leaving currency exchange to the last minute when you travel from the airport.

Buying and Selling Currency Today and Forward Contracts

If you are exchanging money with a currency exchange company you will want to achieve the best exchange rate to maximise the amount of money you receive when you exchange your money. The currency exchange rate will change throughout the day but there are some steps you can take to get an insight in to the direction of the exchange rate for your currency transaction. For example you can look at currency charts to establish if there is a trend. Furthermore economic and political news affects exchange rates too. For example Brexit, interest rate movements, political events and more will determine the exchange rate. If you are happy to trade at the current exchange rate but need to wait to exchange your money you can use a Forward Contract to lock-in today's exchange rate for a date in the future. Forward contracts are particularly useful when you think the exchange rate will worsen out of your favour or you do not want to take the risk of exchange rate movements affecting what you can afford in a foreign currency.

Buy or sell currency at bank beating exchange rates and no transfer fees with XE