The interbank exchange rate is the rate banks and big financial institutions use when swapping currencies from one to another. Currency swaps happen from 5pm EST on Sunday until 4pm EST on Friday. Unfortunately this is NOT the rate you usually get, but you can maximize the rate you do.
Interbank exchanges can be thought of as the price of purchasing one currency for another. These rates enable you to know how much your currency is worth in another currency.
For example, one USD might worth 0.77 GBP
You can get different currency pairs direct from Google simply by typing in the currency you have followed by the currency you want to change it too. Alternately if you want something free that has lots more features but remains user friendly – check out Tradingview and simply type in the pair you want at the top of the page.
Other common currencies (wikipedia) are EUR (€), JPY (¥), AUD (A$), CAD (C$), CHF (Fr), CNY (元), SEK (kr) and NZD (NZ$).
For example, USDGBP:
Expressed as USDGBP = 0.77 (From – To)
You probably already knew that, but what you may not know is that many money transfer companies also display their version of the rate, which may or may not include the cost of doing business with you!
Understanding exactly what you are getting (interbank or offered rate) can be very helpful in understanding what you are paying.
In the same example, if you were using your Money Transfer Company to move $10,000 GBP to the USA they might offer a rate of 0.7595 which is almost about $130 in fees and is very competitive compared to a bank which might charge 3 or 4 times that if you add up all the extra fees and the exchange rate offered.
Why Interbank Exchange Rates are Important
Apart from determining the fees you are getting charged, interbank exchange rates have the biggest impact on the value of your currency after converting to a different currency.
Knowing the interbank exchange rate at a particular time can help you know when to lock in a rate at its most favorable.
In addition, most services will only guarantee the rate they offer for a period of time or not at all. After the period elapses, the rates revert to the prevailing market rates. So in case you need any additional transactions or you happen not have cleared your funds in time, you may end up getting something different.
Our goal is to make it easy for you to make international transfers simple (cheap, fast and safe) and the interbank rate is important.
Taking the time to understand how the interbank exchange rates work to ensure you get a good rate could be the best two minutes you spent today. At Transumo, you will find we talk about interbank rates a lot and also how long they guarantee they offer (while you are moving your funds).
Now you can follow what we are talking about, and make sure you are using the right service for your needs and getting a great rate too.
Happy Transfers and FOREX!