CURRENCY CONVERTER

A currency conversion is a single multiplication: the amount in the source currency multiplied by the exchange rate for that pair. If the reference rate for USD to INR is 87.20, then 1,000 USD converts to 87,200 INR at that rate.

Rates are always quoted as a pair with a direction. The inverse rate — how much of the source currency one unit of the target currency buys — is simply one divided by the rate, which is why very large and very small numbers appear on either side of the same pair.

The mid-market rate sits exactly between the buying and selling price of a currency pair in the wholesale market. It is the rate you see quoted in financial media, and it contains no margin for the institution executing your transfer.

Almost no retail customer transacts at the mid-market rate. Banks and payment providers add a spread to it, and that spread — rather than a headline fee — is often where the real cost of an international payment sits.

Exporters, software service providers and consultants invoicing overseas clients carry currency risk between the day they raise the invoice and the day the money settles. Converting at the current reference rate shows the value today; the settled value can differ.

For businesses with predictable foreign-currency inflows, tracking how a pair has moved over recent months is usually more useful than a single day's number. The FX Trend Analyzer covers that side of the picture.

Two things determine what actually reaches a beneficiary: the rate applied to the conversion and the charges deducted along the way. A provider advertising zero fees may still apply a wide spread, while a provider charging a visible flat fee may convert closer to the reference rate.

Correspondent banks in the payment chain can also deduct handling charges, which is why the credited amount sometimes differs from the amount the sender authorised. Your inward remittance advice documents these deductions.