What Is the Formula to Calculate Exchange Rates?


Quick Answer

The formula for calculating exchange rates is to multiply when exchanging from base currency to a secondary currency, and to divide when vice-versa. Therefore, if the EUR/USD exchange rate is 1.30 euros, and $100 is to be converted into euros, the formula is $100 divided by 1.3, giving 76.92 euros.

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Full Answer

Exchange rate quotes are typically given for a base currency. If money needs to be changed into a secondary currency, then the formula follows the multiplication route. For example, if the EUR/USD exchange is $1.30, and 100 euros is the funds to exchange, then $130 is received in return. Quotes for currency exchange are always given in pairs, so it is relatively straightforward to exchange money from one currency to another.

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