Understanding Money Exchange Rates
When travelling to another country, one of the first things you have to do is exchange your money. While it is a fairly simple process - you can take your money to any bank and they can do the exchange for you - it can be disheartening when it suddenly seems like you have a lot less or a lot more money than you did before. Luckily, understanding just how money exchanges and why is quite easy once you get the hang of it.
- Difficulty:
- Moderately Easy
Instructions
Things You'll Need
- Financial section of a major newspaper.
- Calculator.
- Internet connection.
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1
Look up the value of the currency. You have a few options for obtaining this information. The financial section of any major newspaper (The Chicago Tribune, the New York Times) will be able to provide an accurate to-the-day value of one unit of a nation's currency. If you can't get to a newspaper, an Internet conncetion will also work - you can go to sites like that of the The Wall Street Journal. Make a note of the value.
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2
Look up the value of the currency you want to end up with. You can use the same source you did for step one. Make a note of the value.
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3
Compare the two values. For the sake of this example, we'll assume that you want to go from American currency to Canadian. The value of the one unit of the Canadian currency is going to be equal to that of one American dollar. So in this specific situation, all you'd have to do is multiply the amount of American currency you have by the value of one Canadian dollar. For example, if you the value of the Canadian dollar was $1.34 compared to the American dollar and you had $10 American dollars, you would multiply 10 by 1.34. In Canadian dollars, your $10 would equal $13.40.
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4
Practice converting currencies other than American to get a general understanding for how to do it. To do this easily, you could convert "Currency A" into American much the same way you did the conversions in step 3, and then convert your new American currency into that of "Currency B." Once you've got the hang of these simple equations, you can quickly and easily know the foreign value for your money.
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Tips & Warnings
Depending on the state of a country's economy at any given moment, the exchange rate for your currency may vary wildly after short periods of time. Always research before planning a trip to make sure you get the most for your money.
If you don't want to do the calculations yourself, online currency converters are also available to help you quickly and easily.
