Understanding Exchange Rates

Exchange rates are important to anyone who sends money abroad on a regular basis. Currency exchange rates represent how much a type of currency is worth in terms of another currency. For example, a currency exchange rate of a US dollar to Japanese yen looks something like this: USD/JPY = 107.11 which means 1 US dollar is equal to 107.11 Japanese yen. So if you send $10 USD to Japan, your recipient will get 1071.10 Yen (10 x 107.11).

You may notice that exchange rates fluctuate, and are different on different days. The difference isn’t big, but if you are sending a lot of money, it can add up. The reasons the exchange rate fluctuates is because it is based on the strength of each country’s individual economy, which depends on multiple factors such as inflation, government stability, and interest rates. These things change continuously, causing the exchange rate to be a dynamic, rather than static, number.

When you send money abroad, understanding the exchange rate is important. If you are sending to a country with a stronger economy and, therefore, a stronger type of currency, your money loses some purchasing power. However, if you send to a country with a weaker currency, your money is suddenly worth more. Luckily, most of the time when you send money from US to another country, it will only gain value. The general rule is, the higher the exchange rate, the better. So, the more your dollar is worth, the better off you are sending money that day. This is why it makes sense to pay attention to the exchange rates, and send on the day with great rates. However, in addition to shopping for competitive exchange rates, don’t forget about the transaction fee! Some money transfer services have higher exchange rates, but also charge more through fees.

Sharemoney works hard at getting our customers some of the best exchange rates possible while maintaining low transaction fees. When you send money through our site, you will see the exchange rate and fees before you even start your transaction. And when you enter the amount you want to send, we automatically calculate exactly how much your recipient will get.