Exchange rates for dummies

When sending money abroad it is very important to understand how exchange rates work. Before becoming an expat I had vague souvenirs them from my economics classes in high-school. As I hated it, I had a very bad understanding of exchange rates but it all changed when I first needed to send money back home.



Exchange rate definition

First of all, no one is able to evaluate a currency in absolute terms. Therefore the value of a certain currency is given in relation with another one. This relation is called exchange rate and it represents the amount of foreign currency you can buy with one unit of your currency. So USD-EUR will be different from USD-GBP for example.

Here is how you see it written: GBP/USD = 1,289. It means that with 1 British pound you can get 1,289 US dollars.

All exchange rates are defined on the foreign exchange market. But states have the authority to decide which exchange rate regime to choose. There are two options here:

  • Fixed: it means that the currency rate is fixed compared to another one.
  • Free-floating: the currency rate is changing depending on the demand and off on the foreign exchange market.

The importance of exchange rates when sending money internationally

Another characteristic of exchange rates is that they are unstable and can change very quickly and it is not always in your favor. This means that there are good moments to make international transfers and bad ones.

What happens when you transfer money with your bank for example? Most of the time you will not have any visibility on the exchange that they have applied and it is generally very poor compared to the real one.

It is the same when you are using money transfer operators such as Western Union. Most of the time they sell you free international transfers with no fees. Interesting isn’t it? It is actually not free because they make money on the exchange rate, applying poor ones.

As you have understood, paying attention to exchange rates when sending money abroad is crucial. Especially if you want to optimize your transfers.


The exchange rate article of your dreams

The rate is important when it comes to exchanging currencies. Exchanging currencies is important too. That’s why we all need to know what is the exchange rate article of your dreams. I have to mention that I’ve been helped by moneytis in this matter. I don’t want to exchange articles with anyone but exchanging rates is their speciality. I also have to admit that I’m speaking of my dreams mainly because I have  no idea which dreams you made recently. Any dream that looks too hot for you might not match your kind of dreams. Neither mine. Indeed I usually fly during my dreams. So here is the explanation article about my flying dreams concerning exchange rates.

I dream I fly. I dream the exchange rate flies. Your dreams exchange. Dream-rate the article exchange for sure.

When I dream I can fly I’m not that happy. The thing is I try later to apply it to my real-life. In my real life I sometimes need to deal with exchange rates. For example at airports when I have too much foreign currencies or simply to pay my rent back in my home country, Portugal.

Yes it’s interesting to dream a bit about a good exchange rate because when you are used to deal with currencies exchanges and banks you easily realize that you quickly get wrapped in the fur. In today’s life it’s necessary to fight in order to not get screwed up. I don’t like to fight physically but I fought smartly by using moneytis on this matter.


After nightmares I exchanged rates for dreams. Didn’t work. Still flying.

Did you ever try to make the most of an exchange rate? I would say it’s simple to work. It’s simple to search. But it’s complex to find out about exchange rates. Indeed each time I dream about it I cannot catch the one I want. Same as with PokemonGo when you are hangover.

Anyway we should be speaking about more serious and safe ways. For example using moneytis is a good guarantee to stop being schizophrenia. Indeed it’s an accurate comparison and I receive the USD-EUR exchange rate weekly.

Last but not least I have to say when I speak about Trump and Cristiano Ronaldo -did I?- I’m speaking about other subjects than the dream we are interested in. I want to apologize if it makes you feel it’s a nonsense but you have to understand that I have been looking into 785 money transfer operators, banks, currency specialists and brokers to find out what is the exchange rate right now. And I found 785 different exchange rates. I feel like I’m going to disappear slowly….