Even the most seasoned of travellers have done it before. You find yourself in a rush, and you want to get out and about, I so you check rates online, then change your money in the nearest, reasonable-looking bureau. Yet currency conversion is a complex process and when understood correctly it can yield much better value. Below, we help you understand currency conversion.

What is Currency Conversion?

Conversion is the process of transferring one currency into another. To gauge the value of each, a currency conversion rate is used. As the strength of currencies changes daily, this rate can move up or down. Thus, conversion rates are not static, and you may get more currency one day than you would on another.

This rate is determined by several different factors. One of these is the DXY, which tracks the US dollar against six different currencies. This shows its strength in global markets, which in turn can impact other currencies and their perceived value. However, supply and demand are also other factors that can influence it. As this occurs, central banks will adapt their policies to suit them, changing them once more.

Keep in mind that the exact rate is not the one you will always get. Companies who convert the money for you need to make a profit and may add on fees or charge higher rates.

Reading a Conversion/Exchange Rate

When you convert money, you need to know the value of two currencies. This is the one you currently have your cash in, and the one it will be changed to. The currency listed on an exchange stands for one unit of that currency, and the number given is the amount you receive in the second currency for that amount.

For example, imagine you had GBP/USD. GBP is one unit or one pound. If the given rate is 1.22, that means you get $1.22 for every £1 you exchange.

You can also work this out the other way. For example, if you wanted to work out how much it costs to buy one GBP using USD. Simply divide the rate by one. This would mean 1/1.22 is 0.8196, so it would cost this much to get a single dollar.

Finding the Best Exchange Rates and Conversions

There are a host of different ways you can find and exchange money, and it all depends on the purpose. Exchanging money for large purchases like property is a very different prospect from getting the money to see you over a weekend break. Thus, it all depends on what you want the money for.

When exchanging cash from vendors and bureaus, always check the added fees. These usually change depending on how much you exchange, so it may be best to do it in bulk. If you are prepared, you may be able to get good rates from your bank or similar services back home.

If you are changing large amounts, then there are a host of online providers who will do it with low fees. The caveat is that they may not always have the customer service and protection of the banks. Weigh up the level of risk you are willing to take, check the reviews and decide if they are right for you.

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