What is foreign exchange?
The United Nations recognises around 180 different currencies that can be used to buy and sell goods and services around the world. Exchanging one currency for another so as to buy, sell or settle debts in a foreign country is perhaps the simplest definition of foreign exchange.
Foreign exchange markets can move quickly and unpredictably. Speaking to a WorldFirst relationship manager could provide you with more flexibility and a better understanding as to when to make an exchange or purchase.
What is the interbank rate?
The interbank rate is the rate at which one bank may be prepared to sell US dollars to another bank in exchange for Japanese yen. This rate is much like a wholesale rate and is unobtainable to the general public unless they are exchanging an amount of more than £50m.
The banks make money like any wholesaler in any other industry – they buy at one rate and sell it on at another and the difference in between is known as a ‘spread’.