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Learn about how currency exchange rates work and find the live exchange rate for any currency pair in the world with our MoneyTransfers.com currency conversion hub. Choose your base currency to get started.
What is an exchange rate?
An exchange rate is the value of one currency when converting it to another currency. For example, the US dollar to pound sterling exchange rate is how many pounds sterling you would get in exchange for one dollar.
How do I get the best exchange rates?
Using our MoneyTransfers.com comparison tool is the easiest way to find out how to get best exchange rates for your money transfer. We scour the market to find the best deals from the biggest providers, helping you to compare them by the exchange rates offered, transfer fees, transfer times and more.
But to give yourself the biggest chance of getting a favorable rate on your transfer, we would recommend you also:
Check the mid-market rate: Exchange rates fluctuate by the minute, so if you know you’ll be sending money along a specific route sometime in the future, staying on top of movements can help you time your transfer and get a better rate
Sign up for rate alerts: MoneyTransfers.com rate alerts can help you do this, giving you weekly, bi-weekly or monthly updates for as many currency pairs as you choose
Choose the right provider: Ensuring you have the right provider for your transfer needs helps you keep costs low, whether it’s for specific payment or delivery methods or friendlier rates for the amount you want to send
How do currency exchange rates work?
Swapping one currency for another means buying one currency with your own. For instance, sending money from the USA to the UK involves exchanging US dollars for pound sterling. You're essentially buying pounds with your dollars.
The exchange rate is therefore the cost of buying pounds sterling with dollars. Let’s use the exchange rate at the time of writing this article as an example:
The US dollar to pound sterling (USD-GBP) exchange rate at the time of writing is 0.78240848
This means that it costs $1 to buy £0.78 - as the pound is and has always been traditionally strong against the dollar, despite the US dollar being the most traded currency in the world
So if you wanted to send $1,000 dollars from the USA to the UK at the mid-market rate, the recipient would get £782.40
However, if the provider charges a markup, the exchange rate you’ll see will be slightly different. For example, one of the providers on our panel, at the time of writing, charges an exchange rate of 0.7712 for USD-GBP
This means the transfer of $1,000 at this provider’s rate will give the recipient £771.20. The recipient receives over £10 less than with the mid market rate
This difference is the profit margin for the provider - and it’s worth noting that the provider offering this rate does not charge a transfer fee for this transaction.
What is the mid-market exchange rate?
The mid-market exchange rate, sometimes known as the interbank rate, is the midpoint between the buying and selling price for each currency involved in the transaction. It’s essentially the standard exchange rate for the transaction, determined by natural market forces and agreed upon by the world’s major banks.
Some providers offer the mid-market exchange rate for their money transfers, and this will likely be the best rate on offer for your transfer. Other providers may add a small margin to their exchange rates, which lets them make a little profit off of the conversion.
What is an exchange rate margin or markup?
An exchange rate margin or markup is an extra charge incorporated into the exchange rate given by some money transfer providers. You’ll be able to notice the difference between the rate given by your provider and the mid-market rate - the extra they’ve added on is essentially a profit margin.
Money transfer services usually make their profit in two ways; either adding an exchange rate margin as described above, or charging a transfer fee. Transfer fees are usually more transparent as you’ll see the fee up front, while exchange rate markups or margins can sometimes hide the additional cost charged by the provider.
Of course, some providers charge both - and it can sometimes vary by payment method, amount you’re sending, the currencies involved and more.