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Currency Converter

Understanding Exchange Rates

An exchange rate tells you how much one currency is worth in terms of another. The mid-market rate (also called the interbank rate) is the midpoint between buy and sell prices on the global currency market. This is the 'real' exchange rate that banks use between themselves. When you exchange money at a bank, airport kiosk, or online service, they add a margin (markup) to this rate — typically 1-5% for online services and 5-12% for airport exchanges. Always compare the rate you're offered to the mid-market rate to know how much you're paying in hidden fees.

How Currency Conversion Works

Currency values are determined by supply and demand in the foreign exchange (forex) market — the world's largest financial market with over $7 trillion traded daily. Factors that affect exchange rates include interest rates set by central banks, inflation rates, political stability, trade balances, and economic performance. When a country raises interest rates, its currency typically strengthens because investors seek higher returns. Conversely, high inflation or political instability can weaken a currency. Exchange rates can be fixed (pegged to another currency), floating (determined by market forces), or managed (floating with central bank intervention).

Frequently Asked Questions

What is the mid-market exchange rate?

The mid-market rate is the midpoint between the buy and sell prices of two currencies on the global market. It's considered the 'real' exchange rate. Banks, airports, and money transfer services add their margin on top of this rate. The difference between what you pay and the mid-market rate is essentially a hidden fee.

Why is my bank's exchange rate different?

Banks add a markup (spread) to the mid-market rate to make a profit. This markup typically ranges from 1-5% for online banking and wire transfers, 3-8% for in-branch exchanges, and 5-12% for airport kiosks. Online services like Wise or Revolut typically offer rates closer to the mid-market rate with transparent fees.

When is the best time to exchange currency?

Exchange rates fluctuate throughout the day based on market conditions. Generally, rates tend to be most competitive during overlapping trading hours (8am-12pm ET when both European and US markets are open). However, predicting rate movements is extremely difficult — even professional traders can't consistently time the market. For most people, the best strategy is to compare services and find the lowest total cost rather than trying to time the rate.

How often do exchange rates change?

For major currency pairs (EUR/USD, GBP/USD, USD/JPY), rates change multiple times per second during trading hours. The forex market operates 24 hours a day, 5 days a week (Sunday 5pm ET to Friday 5pm ET). Weekends and holidays have no trading, so rates stay fixed until markets reopen. Our converter uses reference rates that are updated periodically.

What are the most traded currencies in the world?

The top 5 most traded currencies by daily volume are: US Dollar (USD) — involved in 88% of all trades; Euro (EUR) — 31%; Japanese Yen (JPY) — 17%; British Pound (GBP) — 13%; and Chinese Yuan (CNY) — 7%. The USD/EUR pair is the single most traded currency pair, accounting for about 23% of all forex transactions.

Is it better to exchange money before or during travel?

Generally, exchanging a small amount before your trip for immediate expenses (taxi, tips) is wise, but use a credit card with no foreign transaction fees for most purchases abroad. ATMs in your destination country often offer better rates than airport exchanges. Avoid exchanging large amounts at airports or hotels — their rates are typically the worst. Compare online services for larger transfers.