Currency Exchange Made Simple (+ 4 Ways to Get Best Rate)

Understanding currency exchange, how it works, and what affects it might be a complex activity for some people who are not experienced in the financial field.

We know this; and we also know that it is sometimes mandatory to have a background on the subject. Especially, if you are going to have a trip; for example, and you want some cash before travelling. Or maybe you work as a freelancer and expecting to receive some money from abroad and want to change it to your local currency.

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Whatever the situation is, we have explained the main points you need to understand about currency exchange and rates. So, keep this simple guide with you whenever you go.

Let’s delve in!

What Currency Exchange Means

To make it easy for you, lets define each word separately before talking about both of them together. Firstly, currency is any form of money that is used in a certain country. Meanwhile, exchange is basically to change something from one form to another.

When you exchange currency, it basically means you have 100 JOD and want to change them into US dollars because you are travelling to USA next week and want to have some pocket money with you.

Why Currency Exchange Rate Fluctuations Happen?

Currency exchange rate is simply the price of your local currency against another currency. In our example, it is the Jordanian Dinar against US Dollar.

This rate is affected by the many factors that lead to constant change in prices.

Let’s discover the 3 main factors

Higher Interest Rate, Higher Currency Value

Firstly, if your country pays a high interest rate to the central bank, it means that more value is added to the currency. OF course, investors don’t want to risk investing in a country where the currency is of low or no value. They, simply, want to guarantee a good pay back.

That’s why a high interest rate generates more demand for a currency because it motivates investors to exchange their money to the higher one.

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Inflation Is Currency’s Biggest Monster!

Secondly, inflation has a big impact on the currency value. If the country is printing out too much currency that can’t cover the few existing goods, the value is more likely to drop.

This leads investors to invest their money abroad where the inflation rate is low or zero. But again, they will face a big challenge which is low demand for the low-value currency.

Is Your Country’s Economy Strong Enough?

Thirdly, the more economically robust a country is, the more valuable is its currency. Any political or economic instability will negatively impact the currency. 

A stable country attracts investors to buy the goods and use the services and to do so, they need to use its currency more and more.

Any big events that are happening in your country have an impact on the demand for your country’s currency. If you have an economic leap, the interest rate will, by proxy, increase. However, if your country is politically instable, this interest will decrease along with the currency’s value.
 

Also Read: Your Helpful Guide To Understand Wire Transfer

Should I Exchange Currency Before I Travel?

Now you are preparing the money you need for your US trip. You have many ways to do so; some might be convenient, others are costly, Choose wisely!

Before resuming, you need first to check the exchange currency rates online to have a general background of the rates and fees available. Then decide which way is the best from the below list.

#1: Use Your Credit Card

Many banks offer this service of currency exchange to their clients; however, the fees on this service differ from one bank to another. 

That’s why you need to check on the top banks that offer this service and choose the best offer. Beware that some banks issue huge fees on transactions.

#2 The local ATM 

When exchanging currency through ATMs, you get the current rate but with extra transaction fees. It is almost impossible to avoid extra fees when exchanging your money, but minimizing them is definitely possible.

#3 Type in Google: Currency Exchange Near me

Most cities have currency houses where you can go and exchange your money in the most convenient way with the lowest fees. Many travelers resort to these houses because they offer the best rates available in the country to their clients.

If you want an easy and simple way to exchange your money and minimize the time you spend in financial institutions, it is your best options.

#4 Beware of the commission or fees

There are no fees to be paid when visiting an exchange house or bank to exchange your money, there is only a buy or sell rate that they provide you with depending on your case if you want to buy or sell USD. In our example you should buy USD and sell JD.

On the other hand, you should deal with currency exchange houses that show their rates transparently. Those are the ones who can be trusted with your money and transactions

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Is Currency Exchange More Expensive at The Airport?

Although exchanging your money at the airport is convenient, but  it is usually more expensive than the market. you will end up paying more than you should hiddenly in the exchange rate offered by the airport.

Luckily, it is not your only option!

We, at Abu Sheikha Exchange, provide our customers with the best exchange rate possible. Our 17 different branches across Jordan are ready to serve you all week long until midnight, so make sure you visit us before your upcoming trip!

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Abu Sheikha Exchange, Your Trusted Partner.