Important Key Terms
- Exchange Rate — How much one currency is worth in another.
- Forex — The global marketplace where currencies are traded.
- Bid / Ask — Buyer’s price vs. seller’s price for a currency pair.
- Bid–Ask Spread — The difference between bid and ask; often the fee you effectively pay.
- Pip — A small step in a quote (e.g., EUR/USD 1.2800 → 1.2803 is 3 pips).
- Currency Pair — Quoting one currency against another (base/quote).
- Interbank Rate — Wholesale rate banks quote each other.
- Major Currencies — USD, EUR, JPY, GBP, AUD, CAD, CHF.
What Is Currency?
Currency is a medium of exchange. It has evolved from barter and commodities (salt, shells, metals) to coins, paper, and now mostly digital balances. Today’s national currencies are generally fiat—backed by the full faith and credit of their governments.
Modern Currency
Most currency movement is electronic. Cards and mobile payments sit on networks that convert behind the scenes using current rates. Rates move constantly—often second by second.
Cryptocurrency
Crypto assets like BTC operate on blockchains without a central bank. Their prices can be highly volatile. In this calculator, BTC is included for quick reference alongside majors.
What Moves Exchange Rates?
- Inflation and interest rate differences
- Trade balances and capital flows
- Political stability and policy
- Overall economic performance
Travel Tips
- Compare total costs: rate + fees/spread.
- Bank ATMs and your bank’s foreign services often beat airport kiosks.
- Cards can be convenient; watch foreign transaction fees.
- If you return with leftover cash, banks may buy it back—rates vary.
