How Currency Exchange Rates Work (And How to Get the Best Rate)

What actually sets an exchange rate

Currency values float against each other based on supply and demand in the global currency market, influenced mainly by:

• Interest rates. Higher interest rates tend to attract foreign investment, increasing demand for that currency.
• Economic strength and stability. Stronger, more predictable economies generally support stronger currencies.
• Inflation. High inflation erodes a currency's purchasing power, usually weakening it over time.
• Trade balance. Countries that export more than they import tend to see steadier demand for their currency.

These rates move constantly, every second markets are open — which is why any converter, including ours, is showing a live snapshot rather than a fixed number.

The rate you see vs. the rate you get

The mid-market rate (also called the interbank rate) is the "real" exchange rate — the midpoint between what large banks buy and sell currency for. It's the rate quoted by Google, XE, and currency converters like ours.

But when you actually exchange money — at a bank, an airport kiosk, or a money transfer service — you almost never get the mid-market rate. Providers add a margin on top, which is how they make money on the transaction, even ones advertising "0% commission" (the cost is usually folded into a worse rate instead of a separate fee).

Where the markup tends to be worst

• Airport currency kiosks — often the worst rates of all, since travelers need cash urgently and rarely shop around.
• Hotel exchange desks — convenient, but usually similarly marked up.
• Standard bank transfers abroad — often quietly apply a spread on top of transfer fees.

Tips to get closer to the real rate

• Check the mid-market rate first so you know what a fair conversion looks like, then compare any offer against it.
• Use a card with no foreign transaction fees for spending abroad — many now offer close-to-mid-market rates automatically.
• Avoid airport and hotel kiosks unless it's a small emergency amount.
• For larger transfers, compare specialist services against your regular bank — dedicated transfer providers are often meaningfully cheaper.
• If you're not in a rush, watch the rate for a few days before converting a large amount, since even small daily movements add up on bigger sums.