If you’re looking to send or receive money internationally, it’s important to know how to interpret exchange rates as well as understand the reasons the rates may change.
Our handy guide includes everything you need to know so you can feel confident with your next transfer.
Currency exchange rates refer to the price that one country’s currency can be bought and exchanged for another country’s currency. These exchange rates change daily as a result of different influencing factors.
For example, for a trade to take place, one foreign currency will need to be exchanged for another. If you were looking to buy British Pounds (GBP), then you would need to have a balance available in another currency which will be used to purchase the pounds.
The funds in your balance will be used to create the currency pair. If South African Rands (ZAR) is used to buy British Pounds (GBP), the exchange rate will be for the GBP/ZAR pairing.
The good news is that you can easily find out the exchange rate of a particular currency through many different ways, from visiting your local bank or post office to finding it online. For those travelling abroad, you can find the latest exchange rates displayed at the international airport.
If you are trading in the foreign exchange known as the Forex market, you can find the latest currency exchange rates on your trading platform, which is updated in real-time.
If you’d like to receive daily notifications or have access to exchange rates on hand, there are a few great apps on the Google Play store and the Apple App store which will provide you with access at any time.
Here are some useful online tools that you can also use to find out the current exchange rate:
The value of a currency is determined by comparing it to the currency of another country which is referred to as a “currency pair”. In a currency pairing, the first currency is commonly referred to as the “base currency”. The second currency is referred to as the “quote currency”. The currency pair will reflect how much money from the “base currency” will be needed in order to buy one unit of the “quote currency”.
If the GBP/ZAR currency pair is 20.30, that means it costs 20.30 South African Rands (ZAR) for 1 British pound.
Exchange rates are determined this way and will let the buyer know how much it will cost to buy one British pound using South African rands.
Do you need to send money internationally to a loved one? You will need to understand how to interpret exchange rates to calculate how much local currency you will need to make the payment.
A simple way to remember how to calculate the exchange rate is by multiplying the numbers from left to right or by dividing the numbers across from right to left. The currency on the end is the desired final currency of the calculation.
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You can register an account by visiting your nearest Mama Money agent.
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Once your documents have been submitted using the Mama Money App, your account will be verified within 24 hours, and you can start sending money home.
To find out more about how to interpret exchange rates and where you can send money internationally to a loved one, follow Mama Money online via Facebook, Instagram, Twitter, or LinkedIn.
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