In its simplest terms, an exchange rate is how much it costs to exchange one currency for another. Whether it’s Mexican pesos, US dollars, European euros, British pounds or Japanese yen, the relative value of the majority of the world’s most-used currencies can fluctuate significantly over time.
The exchange rate that a country’s currency demands depends on several factors.
- First, the interest rate paid by a country’s central bank has a considerable bearing. The higher the interest rate, the more valuable that currency will be.
- Second, the money supply that’s created by the country’s central bank has an impact. If too much currency is in circulation in relation to the quantity of goods it can be used for, the result is inflation, pushing the value of a currency down.
- Third, a country’s economic growth and financial stability will influence its exchange rates. If the country has a strong, growing economy, then investors will buy its goods and services. They’ll need more of its currency to do so, which of course makes it more valuable.
Knowing the exchange rate for the currencies you’re converting to and from is one thing, but then actually using that rate to calculate the price of things is another – and not one that those who dread mental mathematics will enjoy. Whether it’s figuring out whether a planned purchase is a bargain or a rip-off, or whether a quote for a taxi ride is fair or not, it’s easy to get caught out if you don’t know how to use that exchange rate in practice.
Fortunately, currency converter tools like these can help you out – both with keeping track of the exchange rate, and then using it for day-to-day conversions.
As one of the world’s most trusted currency tools, XE Currency is the go-to app for many travellers. It allows you to keep track of live rates of every currency. As long as you download the conversion rate of your chosen countries in advance, it’ll work offline as well.
CalConvert – as the name suggests – is a calculator, unit convertor, and currency convertor all-in-one. The calculator has advanced mathematical functions and allows you to convert hundreds of different units in addition to currencies. Perfect for not only converting the bill into a more familiar currency, but helping you figure out how to split the payment between friends too. It also has 24-hour support in case you find yourself needing help.
If it’s something a little simpler you’re after, Valuta+ is worth a look. It’s intuitive, user-friendly interface allows you to mark your favourite currencies, so that you don’t have to keep scrolling through the list to find the right one. It also works offline, which is always useful if you’re stuck somewhere without signal and are struggling with the exchange rate.