Currency Converter

How do currency exchange rates work?

An exchange rate is the price of one currency expressed in another, and for most major currencies it floats with supply and demand. In a quote such as USD/EUR, the first code is the base currency and the second is the quote currency, so the number tells you how many euros one US dollar buys. A floating rate is set on the global foreign exchange market and can change many times a second while the market is open.

The mid-market rate

Banks and dealers quote two prices for every currency: a lower price at which they buy it and a higher price at which they sell it. The mid-market rate is the midpoint between the two. It is the fairest benchmark and the figure most financial data services publish, but it is rarely the rate a consumer actually receives.

Why the rate you pay is different

• Spread: banks, exchange bureaus and card networks add a margin to the mid-market rate. It is often not shown as a fee, but it reduces the amount you receive.
• Foreign transaction fees: many credit and debit cards add a percentage charge to every purchase made in another currency.
• Fixed fees: ATM operators and money transfer services may charge a flat amount per withdrawal or transfer on top of the spread.
• Dynamic currency conversion: a shop, hotel or ATM abroad offers to charge you in your home currency and sets its own, usually unfavorable, rate.

How do you convert one currency to another?

Multiply the amount by the exchange rate: amount × rate = converted amount. The only thing to check is the direction of the rate. A USD/EUR rate tells you how many euros one dollar buys, so you multiply a dollar amount by it to get euros. To go the other way, divide by the same rate, or multiply by its inverse (1 ÷ rate). That is why the USD to EUR converter and the EUR to USD converter always use rates that are reciprocals of each other.

A worked example

Suppose a provider quotes r euros per US dollar. Converting 250 dollars gives 250 × r euros, and converting 1,000 euros back gives 1,000 ÷ r dollars. If that provider’s rate sits 2% below the mid-market rate, you receive 2% less than the mid-market result, the same as losing 5 dollars on the 250-dollar conversion. The USD to EUR converter fills in r with the latest European Central Bank reference rate and shows the date it applies to.

Pegged currencies behave differently. The UAE dirham, for example, is held at a fixed rate against the US dollar by the Central Bank of the UAE, so the USD to AED rate barely moves from day to day, although banks and exchange houses still add their own margins.

Cross rates

When two currencies are rarely quoted against each other directly, their rate is calculated through a third currency, usually the US dollar. The euro to pound rate, for instance, equals the USD/GBP rate divided by the USD/EUR rate, so the USD to GBP converter and the USD to EUR converter together give you the euro to pound cross rate.

Decimal places and rounding

Most currencies divide into 100 minor units, such as cents, pence, paise or fils, so amounts are rounded to two decimal places. The Japanese yen has no minor unit in everyday use, so amounts from the USD to JPY converter are rounded to whole yen.

Where do published exchange rates come from?

Most rates you see published are reference rates, compiled by central banks or data providers from market quotes at a set time of day, not prices you can trade at. They are useful benchmarks for comparing offers, valuing invoices and keeping records, but a bank or card issuer will quote you its own rate.

• European Central Bank: publishes euro foreign exchange reference rates for about 30 currencies on every working day, at around 16:00 Central European Time, and states that they are for information purposes only. Each rate is quoted as units of that currency per one euro, so a dollar-based rate is its reciprocal or a cross rate.
• US Federal Reserve: publishes daily foreign exchange rates in its H.10 statistical release, based on buying rates in New York at noon.
• Other central banks: many publish their own daily reference or official rates for their currency, which are often used for tax and accounting.

Not every currency floats freely. Some are pegged to another currency, such as the UAE dirham and the Saudi riyal to the US dollar; the Hong Kong dollar is kept within a narrow band under its Linked Exchange Rate System; and the Chinese yuan is managed around a central parity rate set each business day. Currency names and codes follow ISO 4217, the standard shown in the table above.

How can you avoid poor exchange rates?

Compare every offer with the mid-market rate, pay in the local currency when abroad, and judge money transfers by the final amount received; where you exchange matters far more than the day you choose. These habits help you keep more of your money:

• Compare with the mid-market rate. The gap between a provider's rate and the mid-market rate is the hidden cost of the exchange. A provider with no fee but a wide spread can cost more than one with a small, clearly stated fee.
• Pay in the local currency. When a card terminal or ATM abroad asks whether to charge you in your home currency, choosing the local currency lets your card issuer do the conversion, which is usually cheaper than dynamic currency conversion.
• Check your card's foreign transaction fee. Some cards charge nothing on foreign purchases, while others add a percentage to every transaction.
• Avoid airport and hotel exchange desks. Their convenience is usually priced into a wider spread.
• Compare the amount received when sending money. For transfers to major remittance destinations such as India, Pakistan and the Philippines, the best measure is the final amount the recipient gets after all fees, not the advertised fee alone. The USD to INR converter explains what to compare on transfers to India.
• Be wary of "zero commission" signs. A bureau that charges no commission still earns money through its rate, so check how far that rate is from the mid-market rate.

Planning a trip or a call with someone abroad? The time zone converter helps you work out local times, and the shoe and clothing size converter helps when shopping overseas.

How much does a currency conversion really cost?

The real cost is the gap between what you would get at the mid-market rate and what you actually receive, including the spread and every fee. Expressed as a percentage: cost = (mid-market amount − amount received) ÷ mid-market amount × 100. This single number lets you compare a “no fee” bureau with a transfer service that charges a visible fee.

Worked example: you send 1,000 US dollars with a fixed fee of 5 dollars, and the provider’s rate is 1.5% below the mid-market rate. The fee leaves 995 dollars to convert, and the weaker rate delivers 1.5% less, so the recipient gets the equivalent of about 980.07 dollars at the mid-market rate. The total cost is about 19.93 dollars, or 1.99% of the amount sent, even though the advertised fee was only 5 dollars.

Card spending works the same way. A 3% foreign transaction fee on a 200-dollar purchase adds 6 dollars, and accepting dynamic currency conversion at the till can add a further markup on top. Rates change daily and this page does not show live rates or give financial advice; check the final amount with your provider before you confirm, or look up the current reference rate with the USD to INR, USD to GBP or USD to EUR converter.