FX hedging by Revolut

When I convert some of my wallet to a Foreign currency, how exactly is Revolut covering this exposure? Given the instant nature of the conversion at virtual mid-market rates, Revolut must have the same ability to do so in the background.

If not, there is potentially significant currency risk in Revolut being run ‘in the background’.

Please explain.

Thanks

A hopeful customer.

Hi @PDX66, Revolut does not use mid-market rates for conversion but interbank rates that have a tiny bid/offer spread.

Exchange rates are discussed here a lot. From very different perspectives. But it always seems to come back to the basic problem “what is the interbank rate”.

My recommendation is to search for “interbank rate” in the forum and to dive into some of the threads, even if their title does not describe your question 100%.

This one, for example:
https://community.revolut.com/t/weekend-exchange-rate-surcharge-clarification/4483