Concepts attached with currency
Swift code: International three-letter code for a currency, that is used in official payments transaction. It is EUR for euro.
European Central bank (ECB) publishes the most important exchange rates outside euro area (European states using euro as their currency) every day at their homepage www.ecb.europa.eu. Banks and companies practising currency exchange, rates their exchange rates by utilising ECB's rates.
Average rate: Exchange rate by ECB
Cash rate: Exchange rates for money (tourists' cash)
Commercial transactions: These are used in transactions between companies and in bank giros (bank transfers).
Buying rate tells at which price the bank is buying currency (from you).
Selling price tells at which price the bank sells currency (for you).
Exchange rates are informed in indirect quotation or in direct quotation. In indirect quotation, it is informed, how much one euro is in other currency. In direct quotation, it is informed the value of one currency in euros.
Exchange rates are different among exchange companies as their are collecting profit from their sales. Furthermore, you usually have to pay some fixed fee for an exchange. The fee is ever fixed amount of cash (e.g. 3.70 euros/exchange) or some percentage of the amount exchanged (e.g. 1.3% of exchanged cash).
Exchange rates for cash
Example 1.
How much will you get Swedish crown with 650 euros?
Now, Forex is selling you the notes and your amount is in direct variation to the exchange rate:
Example 2.
How much would a Swedish tourist get euros with 730 SEK?
Commercial transactions
Example 3.
A company has a claim of 35000 CZK. How much is it in euros?
In this case, the bank is buying korunas from the company. Because the claim is not cash but commercial transaction, rates are looked from above table.
Example 4.
A company must pay a bill of 28730 THB. How much is it in euros?
Now, the bank is selling bahts for the company, so we must use selling rates.
Example 5.
The value of a currency is informed with with ECB's rate. In the below table, there is shown value of one euro in US dollars and Japanese yens.
