Money Foreign Currency Exchange Rate
If you use interbank rate, this is the rate at which banks and major financial institutions get the currency from international foreign exchange trading. The total interbank volumes are in trillions of dollars per day, and typical lot sizes are in the tens of thousands per trade. The characteristics of interbank trading also mean that small to intermediate size foreign exchange trades are done outside of the interbank trading. Also, as trading is done with smaller volumes and the trading is done in a less efficient environment, the price that the trader pays for the trade is worse than in the interbank market. Typical rates where everyday consumer gets to the foreign exchange rates is through credit card purchases or through exchanging cash at forex bureaus. These rates are typically much worse than in interbank trading. However, the credit bank rate is typically better than what cash transactions are done with over the counter. This also means that many forex analysts recommend using credit card on foreign trips or withdrawing cash with the credit card, as it is cost efficient to exchanging coins and notes into foreign currency. The problem with cash and credit card exchange rates really is that each credit card company and forex bureau typically has its own rates that they use, but you can estimate these rates from the interbank rates to give a general indication. For example OANDA (oanda.com) estimates that credit card rates are on median 2% worse than what interbank rates are, and in turn, the cash rates are 4% worse than the interbank rates. |