Exchange rate error

[capital]

The mid interbank rate is simply the average between the bid and the offer.

@Frank

Hi @Ryan, with wholesale interbank rates, there is a bid / offer spread. Every “roundtrip” results in a loss, even if the currencies would not fluctuate during a “roundtrip”.

Check this: http://www.truefx.com

@capital

The basis of securities (a tradable financial instrument. Currencies are ) is that there is no such thing as ‘the price’ or ‘the rate’.

Two individuals/entities in a market play the role of the bidder and the asker. The bidder offers to buy, the asker offers to sell. Therefore, the ‘bid’ and the ‘ask’.

Depending on how the data is presented, data is usually the median between the bid and the ask, or the price of the last trade.

On the retail (consumer) level, the process of buying and selling securities is sometimes simplified so that the price just displays as the median between the bid and the ask.

@anon33247966

The reason why you feel like you are getting extra percentage points charged is because in some cases (usually rare cases) the difference between the mid-market rate (as shown on XE) and the interbank bid rate can be slightly larger than expected.

What people see online is the mid-market rate, i.e. the average between the bid and offer rate. This is because when you go to search up a currency pair the website doesn’t know whether you’re looking to buy or sell that currency so it just gives the middle.

@Frank

There is a difference between “sell” and “buy” interbank rates, which alone would explain the loss of a GBP-USD-GBP transaction, even if all rates involved would stay exactly the same during the experiment.