Currency converter

Our  free currency converter is here to help you stay on top of exchange rates, whether you’re planning a vacation, making an online purchase, or conducting global business.

Ian Hawkins

Page written by Ian Hawkins. Last reviewed on July 11, 2024. Next review due April 1, 2025.

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Key terms

Here’s a handy list of key terms you should know about foreign currency exchange:

Exchange rate: The value of one currency expressed in terms of another. For instance, how many Canadian dollars you get for one US dollar.

Forex: The foreign exchange market, or forex, is a global, decentralized market where currencies are traded. It’s the largest market in the world, followed closely by the credit market. Forex exists because one unit of currency usually isn’t equal to one unit of another currency, helping facilitate equal value exchanges.

Bid price: The price a buyer is willing to pay for a unit of currency.

Ask price: The price a seller is willing to accept for a unit of currency.

Bid-ask spread: The difference between the bid and ask price. Buyers aim for the smallest possible spreads, while sellers prefer the highest spreads. In real-world currency exchanges, brokers, banks, and businesses set their own exchange rates with bid-ask spreads that include a percentage profit, often referred to as a fee or commission.

Pip: The smallest unit of value in a bid-ask spread. For example, in the currency quote EUR/USD 1.2800/1.2803, the difference is 3 pips. A pip is sometimes called a point.

Currency pair: A quote showing the relative value of one currency unit against another. The first currency in a pair is the base currency, while the second is the quote currency.

Interbank (bank-to-bank) rate: The wholesale exchange rate that banks use among themselves.

Major currencies: This refers to the most traded currencies, which usually include the US dollar (USD), Euro (EUR), Japanese yen (JPY), British pound (GBP), Australian dollar (AUD), Canadian dollar (CAD), and the Swiss franc (CHF), Rupees (INR). Any currency pair that includes the USD is known as a major currency pair.

What is a currency converter?

A currency converter is a tool that allows you to quickly and easily convert one currency into another. It uses the current exchange rates to calculate the equivalent amount of money in different currencies.

Currency converters are commonly used by travellers, businesses, and anyone needing to understand the value of money across different countries and provide a convenient way to stay updated on currency values and make informed financial decisions.

What is an exchange rate?

An exchange rate is the value at which one currency can be exchanged for another. It determines how much of one currency you will receive in exchange for a unit of another currency.

Exchange rates fluctuate based on factors such as economic conditions, interest rates, and market demand for currencies. They are essential in international trade and finance, as they influence the cost of goods, services, and investments across different countries.

Why use a currency converter?

Using a currency converter is helpful for several reasons:

  • Travel planning: It assists you in understanding how much your money is worth in another country, allowing you to budget more effectively.
  • Business transactions: It makes international business easier by allowing companies to convert currencies accurately when dealing with cross-border transactions.
  • Online shopping: It assists you in comparing prices and determining the cost of goods in your local currency when shopping from international websites.
  • Investment decisions: It helps investors and financial analysts assess the value of foreign investments by converting returns into their home currency.
  • Personal finance management: It assists you in managing your finances better when you have income or expenses in different currencies.

Factors that influence exchange rates between currencies

Exchange rates between currencies are influenced by several factors, including:

  • Interest rates: Higher interest rates offer lenders a better return relative to other countries. As a result, higher interest rates attract foreign capital and cause an appreciation in the value of the currency.
  • Inflation rates: A lower inflation rate in a country compared to others will see an appreciation in its currency value.
  • Political stability: Countries with less risk for political turmoil are more attractive to foreign investors, causing their currencies to appreciate.
  • Economic performance: Strong economic performance leads to increased foreign investment and an appreciating currency.
  • Public debt: Countries with large amounts of public debt are less attractive to foreign investors, leading to currency depreciation.

Currency tips for traveling overseas

When traveling abroad, it’s wise to keep these tips in mind:

  • Plan ahead: Check current exchange rates before you go.
  • Avoid airport exchanges: They often have the worst rates.
  • Use ATMs: They typically offer better rates than exchange bureaus.
  • Inform your bank: Let them know you’ll be traveling to avoid any issues with your card.
  • Carry some cash: Not all places accept cards, so having local currency is helpful.
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