Currencies are converted using an exchange rate. This rate is the relative price of two currencies. For example, if the exchange rate between the Aussie dollar and the US dollar was 0.7200, it means for every Australian dollar you’ll get 0.72 US cents. The exchange rate can also be considered as the normative value of a country’s currency in comparison to another currency.
Currency converters can take care of all the hard work as they use the exchange rate to work out how much your Australian dollars are worth in another currency. For example, you were going on holiday to the US and had saved up $3,000 Australian dollars spending money, a currency converter could let you know how much your Australian dollars would cover in US dollars. In this case, if the exchange rate was 0.7200 for $3000 Australian dollars, you could have $2,160 US dollars.
How is the exchange rate worked out?
The exchange rate is decided by the foreign exchange market, also known as the FX market or forex market. When you change your money into US dollars to go on holiday, or shop online at a European site using Euros, you’re taking part in this market.
The foreign exchange market is the largest market in the world and is open 24 hours a day except for weekends. Every day, an estimated $3.4 - $5 trillion dollars is exchanged on this market.
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This information has been prepared by St George Bank – A Division of Westpac Banking Corporation ABN 33007457141 AFSL and Australian credit licence 233714. This information does not take your personal objectives, circumstances or needs into account. Consider its appropriateness to these factors before acting on it.
The exchange rates provided are applicable to foreign exchange products described on this website. The exchange rates are indicative only as at the time and date shown, are subject to market movements and therefore change continuously. They may also vary depending on the type of the transaction involved, and may be different for transactions over a certain amount. They should not be relied upon as an accurate representation of any final pricing. You should contact Westpac for up-to-date pricing prior to dealing. Transactions may be subject to certain fees and charges.