# Currency Exchange Rates Made Simple!

##### What is a Currency Exchange Rate?

An exchange rate is the value of one nation’s currency versus the currency of another nation or economic zone. For example, how many U.S. dollars does it take to buy one euro?  As of May 3, 2019, One American Dollar currently exchanges at a rate of 0.8051 EUR

##### Real World Example of How Exchange Rates Work

John is traveling to Germany from his home in New York and he wants to make sure he has 200 dollars’ worth of euros when he arrives in Germany. He goes to the local currency exchange shop and sees that the current exchange rate is 0.8051. It means if he exchanges \$200, he will get €248.42 in return. In this case, the equation is: dollars ÷ exchange rate = euro. Example:

\$200 ÷ 0.8051 = €248.42

##### Quick Currency Exchange Rate Terms:
• Sell Rate: The rate at which the foreign bank is willing to sell their local currency to you in exchange for the foreign money you have brought.
• Buy Rate: The rate at which the bank or currency exchange would buy your foreign paper currency back in exchange for American dollars.
• Holiday Money Rate or Tourist Rate: Another term for “sell rate” that gets affected by the trends in travel, performance and world economies.
• Commission: Foreign-exchange providers charge a fee for exchanging one currency into another currency.

International travel is fun but it can be stressful. It’s helpful to do your research before your vacation to better calculate and plan how much money will be spent. If using a credit or debit card, use the card that doesn’t charge an international transaction fee. FX-rate is one tool that calculates if a dollar is worth a dollar abroad. When travelers know how much they are spending ahead of time, planning becomes easier and you can find the exchange rate possible.

##### Key Takeaways
• An exchange rate is the value of a country’s currency vs. that of another country or economic zone.
• A free-floating exchange rate rises and falls due to changes in the foreign exchange market
• When changing travel money in a foreign country, it is common to be caught off guard on their foreign currency exchange rate process as well as trying to navigate through the unfamiliar phrases and language barrier.