How to Read Exchange Rates
Learn what exchange rates mean, the difference between bid/ask spreads, and how to interpret a currency pair like USD/EUR.
What Is an Exchange Rate?
An exchange rate is the price of one currency expressed in terms of another. For example, USD/EUR = 0.92 means 1 US Dollar buys 0.92 Euros. Exchange rates fluctuate constantly based on supply and demand in global currency markets.
How to Read a Currency Pair
A currency pair is written as BASE/QUOTE (e.g., GBP/USD). The base currency is what you are buying or selling. The quote currency is what you pay with. A rate of GBP/USD = 1.27 means 1 British Pound costs 1.27 US Dollars.
Bid vs Ask: The Spread
The bid price is what buyers will pay for the base currency. The ask price is what sellers want. The difference — the spread — is the profit margin for banks and brokers. When you exchange money at an airport or bank, the spread is often much wider than the interbank rate shown on this site.
Live vs Indicative Rates
Rates shown on financial sites like this one are mid-market rates — the midpoint between bid and ask. These are the fairest reference rates but are not the exact rates you will receive at a money changer or bank. Always compare the rate you are offered against the mid-market rate to gauge the markup.
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