How Do You Calculate Money Exchange Rates?


Quick Answer

The exchange rates for various world currencies are constantly fluctuating due to currency trading on the world foreign exchange market. While banks and other currency exchange stations do not offer the exact, up-to-the-minute market rate a currency is trading for, the exchange rate those entities offer customers is based on the market rate. To calculate the exact exchange, contact a bank or exchange station, and find out the rate offered for the desired currency.

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How Do You Calculate Money Exchange Rates?
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Full Answer

If the market exchange rate between euros and U.S. dollars is 1.335, for example, a bank or currency exchange might offer an exchange rate of 1.35. When trying to calculate the exchange of $1,000 for euros, divide 1,000 by 1.335. This calculation shows that at the current market rate, $1,000, would trade for just over 740 euros. If, however, one needs to calculate the amount of U.S. dollars necessary to exchange for a fixed number of euros, multiplication would be used to perform the reverse calculation. For example, when calculating the amount of dollars necessary to exchange for 1,500 euros, multiply 1,500 by the 1.35 exchange rate offered by the bank. This calculation would show that one needs $2,025 if one is seeking to exchange for 1,500 euros.

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