What is the mid-market rate?
To put it simply, the mid-market rate (or interbank rate) refers to the midpoint between the buy and sell prices of two currencies.
Who uses the mid-market rate?
The mid-market exchange rate is typically used by banks and international brokers when transferring money between each other. This rate is influenced by external economic factors, meaning every currency pair comes with a different exchange rate. Some examples of economic influencers include the following:
- Interest rates
- Economic performance
- Political uncertainty and government debts
- Trade agreements
All the above factors contribute to the ever-changing nature of the mid-market rate, which fluctuates within seconds, as currencies are traded globally on the foreign exchange market.
Is the mid-market rate important?
In short, yes. This is because banks have long been known to add a variable margin to the ‘buy’ and ‘sell’ price without telling customers. This is how many currency brokers make their money, which owes to a huge lack of transparency across the industry. With several costs being hidden within the Buy and Sell prices, knowing the mid-market rate upfront allows you to know what additional costs have been added on top of the actual exchange rate.
How do I find out the mid-market exchange rate?
It’s relatively easy to track where the mid-market rate price is by using trusted sites such as Yahoo Finance or fxstreet.com. Once you’ve established what the buy and sell price is, your currency broker or bank will then add on a margin, often without disclosing how much. The gap between the buy and sell rate, in addition to what you can be offered, is your spread or margin. This can range anywhere from 0.1% to 3.0%. WorldFirst is one of very few to have three clearly defined margins, based on annual turnover, allowing you to easily calculate your costs and avoid any excessive broker or bank margins.
Unlike some of the big banks, we at WorldFirst take a smaller spread and pass this benefit on to our clients, making all our transfers simpler and more transparent. This is reflected in our tiered and transparent pricing, whereby we offer three clear pricing bands. Our standardised pricing allows customers to receive a fixed spread based on their annual trading volume.
Eliminating the need to negotiate, you’ll always know what rate you’ll receive on every trade, every time. The minimum transfer amount for individuals and businesses in the UK is £1K. Take a look at our pricing below:
Find out more by visiting: https://www.worldfirst.com/uk/pricing/.