Exchange rates determine the value of one currency in terms of another—essential knowledge for travelers, businesses, and international investors. This calculator converts between currencies and helps you understand the true cost of foreign exchange.
How This Calculator Works
This calculator provides currency conversion:
- Amount: How much you want to convert
- From Currency: Your source currency
- To Currency: Your target currency
- Exchange Rate: Current conversion rate
- Converted Amount: Result in target currency
- Inverse Rate: Rate in opposite direction
The Formula Explained
Converted Amount = Source Amount × Exchange Rate
Inverse Rate = 1 / Exchange Rate
Example: 1,000 EUR × 1.08 (EUR/USD) = $1,080 USD Inverse: 1 / 1.08 = 0.926 USD/EUR, so $1,000 USD = €926
Step-by-Step Example
Multi-Currency Conversion
| From | To | Rate | Amount | Result |
| $1,000 USD | EUR | 0.92 | 1,000 | €920 |
| €1,000 EUR | GBP | 0.86 | 1,000 | £860 |
| £1,000 GBP | JPY | 188 | 1,000 | ¥188,000 |
Exchange rates fluctuate constantly based on market conditions.
Frequently Asked Questions
What determines exchange rates?
Exchange rates are determined by supply and demand in currency markets, influenced by: (1) Interest rate differentials between countries, (2) Inflation rates, (3) Economic growth, (4) Political stability, (5) Trade balances, (6) Central bank policies. Trillions of dollars trade daily, making forex the world's largest market.
What's the difference between a floating and fixed exchange rate?
Floating rates (most major currencies) move freely based on market forces. Fixed rates (pegged) are set by governments relative to another currency (like the Hong Kong dollar to USD). Some currencies use managed floats—market-driven but with central bank intervention limits.
What is the mid-market rate?
The mid-market rate is the true exchange rate—the midpoint between buy and sell rates on global currency markets. It's what banks use between themselves. Consumer services add a markup. When comparing exchange options, check how close they are to the mid-market rate.
Why do I get a worse rate than what's quoted online?
Online rates show the mid-market rate for reference. Actual exchange services add margins: (1) Banks typically add 1-3%, (2) Airport exchanges add 5-15%, (3) Credit cards add 0-3%. The difference is their profit. Better services offer rates closer to mid-market.
What are buy and sell rates?
When you exchange currency: Buy rate is what they'll pay for your currency (you're selling). Sell rate is what they charge to sell you currency (you're buying). The gap (spread) is their profit. A tight spread means a better deal for you.
How do exchange rates affect international shopping or travel?
When your currency is strong (high exchange rate), foreign goods are cheaper—great for travel and imports. When your currency is weak, foreign items cost more. A 10% currency swing can make the difference between a bargain and an overpriced purchase.
Should I exchange money before or during travel?
Generally: (1) Avoid airport exchanges—worst rates. (2) Use no-foreign-fee credit cards for purchases. (3) Withdraw from ATMs abroad using a fee-free debit card. (4) Exchange a small amount beforehand for immediate needs. Credit/debit cards typically get better rates than cash exchanges.
What is a currency pair?
A currency pair shows one currency priced in another. EUR/USD = 1.08 means 1 Euro costs 1.08 US dollars. The first currency is the base; the second is the quote. Major pairs involve USD (EUR/USD, USD/JPY, GBP/USD). Cross rates don't involve USD (EUR/GBP).
Key Points to Remember
- Mid-market is the benchmark: Compare any offered rate against it
- Spreads are profit: Tighter spread means better deal for you
- Cards often beat cash: No-fee credit/debit cards usually offer better rates
- Avoid airports: Currency exchange booths at airports have worst rates
- Rates fluctuate constantly: What you see today may differ tomorrow