x

Send us a message

For those who work abroad or make regular international currency transfers knowing the facts about foreign exchange rates will help get the most out of money transfers. While it is easy to allow banks to take charge of your money transfers, you could end up paying a lot more on hidden costs. If you are a regular trader it is important to understand the basics of FX rates and how the market drives it.

Facts about Foreign Exchange Rates

  • FX or Foreign Exchange is the value of a particular nation’s currency in comparison to the value of another nation’s currency usually termed domestic currency but also called the counter or base currency. The first currency listed stands for one unit of that particular currency and the FX rate is the amount needed from the second currency listed to purchase one unit of the first currency. For example, if the exchange rate for USD/AUD is 1.30, it will cost 1.30 Australian dollars to purchase 1 United States dollar.
  • FX rates are determined by the foreign exchange market where trading is done 24 hours a day on weekdays and is open to all types of different buyers and sellers. A spot rate is determined by the supply and demand for currencies. The supply and demand is created by banks all over the world buying and selling currencies on behalf of their customers. For example, the sum total of all bank transactions in US dollars creates the supply and demand for US dollars. As the demand for US dollars increases, the value of the US dollar will appreciate and when the demand drops the value will depreciate against other currencies. The rates are set each day by the participation of all banks bidding and offering on currencies among each other.
  • Real Time FX rates are the rates that a provider receives from its rate provider and is devoid of any profit or mark-up margin. The benefit of sending money with real-time FX rate is that no profit margins are added when remitting money. Online remittance service providers and banks add profit margins to foreign exchange rates and do not offer customers real-time FX rates. This is a legal and authorized trade practice but may seem unfair from a client’s perspective.
  • The exact live or real-time foreign exchange rates can be checked online from reliable sources on the internet such as Google, Reuters, Bloomberg, and xe.com. You can choose to avoid unfair FX rates from banks by choosing other remittance platforms such as InstaReM which offers real-time FX rates on money transfers.