Currency Buy and Sell rates


#1

Can someone explain about buying and selling rates to me please, I get very befuddled!

My base account is GBP. If I receive a payment in Euros is it the buying or selling rate that is used to convert the Euros into GBP? Is that buying or selling?

This is my understanding…

1 euro = £0.89
1 GBP = 1.13 euro

So 1000 euro is £884.95

If rate goes up to 1.2
1000 euro = £833.33

If rate goes down 1.1
1000 euro = £909.09

So if I’ve understood it correctly I would receive more GBP if the rate does down.

Is that right?!


Multiple Currencies
Help/Advice General Discussion
#2

Currency account basics:

If you receive a payment in Euros to your via your personal EUR IBAN, then the monies received would remain in Euro.

There will be no currency exchange or conversion involved.


Exchange Rate Impact on Amount Received:

You can however, exchange (convert) the Euros received into the Pound Sterling.

If the pound strengthens, then the amount of GBP that you will receive after converting from EUR will decrease.

If the pound depreciates, then the amount of GBP that you will receive after converting from EUR will increase.


Worked examples:

£1:€1.1
£100 --> €110
€11-0 --> £100

£1:€1.2
£100 --> €120
€120 --> £120

€1:2:£1
€120 --> £100
£100 --> €120

€1.1:£1
€110 --> £100
£100 --> €110


Multiple Currencies
Help/Advice General Discussion
#3

I will be exchanging the euros to GBP. I know this is a dumb question but if the rate changes from 1.1 to 1.3 is that the pound strengthening?

If I’m exchanging euros to GBP is Revolut buying GBP or selling EUR?


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Help/Advice General Discussion
#4

If the GBP:EUR rate changes from its current 1:1.14 to 1:1.3, the pound will have strengthened.

For every £1 that you hold, you can exchange it for €1.30. To acquire £1, you will need to exchange €1.30.

Contrast this with:

If the GBP:EUR rate changes from a theoretical rate of 1:1.3 to 1:1.14, the pound will have weakened.

For every £1 that you hold, you can exchange it for €1.13, which is a decrease from the previous amount of €1.30. To acquire £1, you will now only need to exchange €1.13, as opposed to the previous amount of €1.30.


If you are exchanging Euros for the Pound Sterling, you will be buying Pound Sterling in exchange for Euros.


Help/Advice General Discussion
Multiple Currencies
#5

So I would look at buying rates? If I’m comparing Revolut with other companies. Sorry, I’ve never been able to get my head around the difference between buying and selling rates. In this instance I would be the buyer and Revolut would be the seller?


Multiple Currencies
Help/Advice General Discussion
#6

GBP:EUR and EUR:GBP are related to the same currency relationship. It doesn’t really matter which one you pick (I personally prefer GBP:EUR and USD:GBP, but that’s besides the point.) since you can use multiplication and division to calculate the amount.

Therefore if you’re converting to EUR from GBP, you would use multiplication using the GBP:EUR rate. Conversely, if you’re converting from EUR to GBP, you would use division using the GBP:EUR rate.


If you’re not too keen on the mathematics, I highly recommend using Revolut’s built-in converter.

Getting to Revolut’s Built-in Converter:


Demonstration of the Converter:


fee withdrawal
Help/Advice General Discussion
Multiple Currencies
#7

Thank you. Just to close. In simple terms for this blonde!

If the GBP:EUR rate goes down the pound has weakened, if the rate goes up the pound has strengthened.

1.3 = Costs £769 to buy 1000 euros - pound has strengthened.
1.14 = Costs £877 to buy 1000 euros - The rate has dropped, the pound is weak, it costs me more GBP to buy euros.

1.3 = Receive £769 if exchanged from 1000 euros - pound has strengthened
1.14 = Receive £877 if exchanged from 1000 euros - pound has weakened

So if I’m being paid in euros and exchanging to GBP it’s better for me if the pound is weak as I’ll receive more GBP than if the pound is strong.

Have I got that right?!


Multiple Currencies
Help/Advice General Discussion
#8

Yes.

If you strip away the ‘1:’ part and just imagine the number on the right of the colon (e.g. ‘1.3’ from £1:€13.), and use that to compare, you can see whether it has strengthened or weakened.

Original: 1.13 (£1:€1.13).
New rate: 1.30 (£1:€1.30).

If the number is bigger than the previous number, then it’s strengthened, and if it’s smaller, than the base currency (GBP) has weakened.

1.30 is greater than 1.13, which means you get more than before. Therefore, strengthened.

If it drops to 1.05 from 1.13, then it means that you get less then before. Therefore, weakened.

Yep.


Foreign exchange markets (The global markets for currencies, essentially.) are notoriously complex and volatile.

Theoretically yes, it’s better to exchange from the Euro to the Pound if the pound is weak (You buy more pound sterling with every euro.), and vice versa (Buying Euros/Dollars if the pound is strong.), but it’s really hard to give advice as to how the pound sterling will perform today, tomorrow, next month, and the next year.


This thread might be of interest:


Multiple Currencies
Help/Advice General Discussion
#9

Thank you… think I’ve got it now!


#10

So- a couple of remarks about this surprisingly interesting discussion… the questions really did appear basic, but I guess everyone- apart from savant-syndrome-like, math geniuses :wink: - always has a little short moment of hesitation when looking at the rates of ‘major’ currencies.

It’s a lot easier with PLN, ironically, when you know it’s ~4PLN per one unit of major currencies, oh well, specifically 3,6PLN per USD, 4,25per EUR and almost 5PLN per GBP.

Anyway, a couple of strategies for your mind to be able to get the idea in a split second:

  • “Normally”, you can remember that EUR is “always” “weaker” than GBP- and I don’t wish you, UK fellas, for it to be any different in the near future. :wink:
    So any rate you see- you know you’re getting more EUR then GBP. From there, it’s pretty easy to imagine what was explained: the more rate goes up, the more GBP you get for 1 EURO

  • Use Revolut exchange tool rather than the converter! It doesn’t hurt just to set up the conversion from EUR to GBP and type in a value and just see what you get for it. Be careful not to hit ‘exchange’ though, if you don’t want to.
    But that’s really useful- type in 1000EUR and observe how much GBP you tend to get for it. Very clear.

SIDE NOTE but important: it DOES DOES DOES matter how you input currencies in converter or rate projector. What I mean is that EUR/GBP is a different rate than GBP/EUR -> buy vs. sell.

On weekdays, the difference is super-tiny, b/c it’s awesome Revolut, but on the weekend you can get exactly what I mean; The sell/buy rates will be different b/c of the weekend markup.
So- back to the previous bullet, it’s a lot more clear to actually simulate an exchange.

And always, always, make your exchanges on weekdays and preferably in the UK working hours (for EUR/GBP), to get the bestest of the best rates. For major currencies, it’s pretty much the same rate you see on XE.com.

Discussions like these make me realize again and again that we’re offered a forex exchange rate, no commission, on your phone, and just how awesome Revolut actually is. :slight_smile: