How to get the best currency exchange rates

Where can I find a good foreign exchange rate in town? When it comes to currency exchange, from local residents to travelers who need cash, from individuals to companies that need to send money overseas, people are always trying to find the best exchange location. Well, there are many places that provide currency exchange services for the public: banks, local currency exchange shops/bureau de change, foreign exchange kiosks in airports and hotels, or you could even use your credit/debit cards or withdraw cash at Foreign ATMs. Some banks and currency exchange shops even provide online order delivery services. However, have you ever noticed that the exchange rates offered could be significantly different from place to place? In this article, we will dive into details about how does currency exchange work, and teach you how to compare, calculate and get the best currency exchange rates.

foreign currency picture

However, have you ever noticed that the exchange rates offered could be significantly different from place to place? In this article, we will dive into the details as to how to compare, calculate and get the best currency exchange rates.

Without further ado, here are some useful tips for rates comparison:

  • Reputable currency exchange shops and dealers are highly recommended as they usually offer the most competitive rates;
  • The exchange rates at airport kiosks, hotels or Foreign ATMs are normally the worst with high service fees, so they should be used only as a last resort;
  • Some financial institutions and credit unions may offer favourable rates to their long-standing customers, but the rates may vary depending on the type of account you have with them, therefore to get a better rate you might need to contact different banks;
  • Paying in U.S. dollars is not always a good idea, even if you have the choice. Exchange rates are fluctuating most of the time, the price that shows in US dollars may not be a great deal. Usually the merchant will use poor exchange rates and charge you some extra fees if you are not paying in their local currency.

Additional tips on how to find the best rates:

  • Start paying attention to exchange rates as early as possible: it is difficult to forecast foreign exchange rates, as rates are fluctuating daily. Therefore it is recommended that you start to observe currency movements at least a few weeks before the exchange, regardless of personal or business demand. Buy when the exchange rate of your home currency rises and is strong;
  • Try to avoid conduct the foreign exchange at the last minute due to rate uncertainty and other uncontrollable factors, always trade your currency at a moderately favorable price;
  • Understand the middle market interest rate: The middle market rate is also called the interbank rate, it is also known as the middle rate between the global supply and demand of that particular currency, and a reference rate for the transfer service used by banks in mutual transactions; It is the midpoint between buy and sell rates of any two currencies at any time, and it is also constantly change. Although the middle market is only for reference between central banks, and no financial institutions or currency exchange places could trade at mid-market rate, use mid-market prices to compare any prices you are offered by different By searching on Google or other browsers, you could easily find the websites that offer mid market foreign exchange rates.

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Major Canadian financial institutions that offer foreign currencies:

Finding their contact information may be time-consuming. For your easy reference, in this article, we have summarized the major banks that trade foreign currencies with the links to compare their rates.

  • RBC

    Royal Bank of Canada(also known as RBC) is a Canadian multinational financial services company and the largest bank in Canada. The company is headquartered in Toronto and headquartered in Montreal.

    As one of the leading diversified financial services companies in North America, RBC provides personal and commercial banking, wealth management, insurance, investor services and capital markets products and services worldwide.

    RBC sells over 50 different currencies(USD, EUR, GBP, AUD, CHF, MXN as well as many other exotic currencies), and they provide foreign exchange services to both individual and corporate clients, from banknotes to bank drafts. However they usually only have USD cash in stock, so for other currencies you need to order with them in advance. Also to trade with them, you need to have existing accounts with RBC. To open a bank account you need to visit their branch in person.

    RBC has an online foreign currency exchange converter that you could use to check the rates: RBC rate calculator

  • Bank of Montreal (also known as BMO)

    Bank of Montreal(also known as BMO) was founded in Montreal, and is a multinational investment bank and financial services provider.

    BMO has branches nationwide and trades many major and exotic foreign currencies. You need to firstly open an account with them in order to trade foreign currencies with them. Once you are an existing customer, you could either order through your online banking account, or a local branch. Foreign currency orders usually take up to 7 business days, depending on the amount and currency.

    To find out their exchange rates, please visit their website: BMO foreign exchange rates

  • Scotiabank

    Scotiabank was founded in 1832 in Nova Scotia, and it relocated the headquarter from Halifax to Toronto in 1900. It is now the third largest bank in Canada by deposits and market capitalization

    They also trade major foreign currency banknotes and provide services for corporate, small business and individual clients with existing bank accounts with them. Same as other banks, Scotiabank branches do not carry foreign currencies in stock, therefore you need to place an order at least one week in advance with them.

    Scotiabank foreign exchange rates can be found here:Scotiabank foreign exchange rates

  • TD Canada Trust(also known as TD)
  • As one of the rapidly growing commercial banks in Canada. TD also provides money exchange services of most major foreign currencies to their own customers, but they do not have foreign currencies in stock as well. Worth noting, they have one branch located in downtown Toronto that specializes in foreign currency exchange, but rates are usually less attractive. To order foreign currencies from them, all you need to do is go to one of their branches, or contact them by phone. Please make sure to check and compare their rates before trading with them as the rates could be higher than some other places.

    TD currency exchange website: TD foreign exchange calculator

  • Canadian Imperial Bank of Commerce(also known as CIBC)

    CIBC is another multinational banking and financial service corporation headquartered in Toronto. To trade foreign currencies with them, you need to firstly open an account with them. Same as other banks, their branches also do not carry any foreign currencies, so you need to order at least one week in advance if you are buying from them. And they do not post their exchange rates online publicly.

  • Currency Mart

    Currency Mart is a federal incorporated licensed leading private currency exchange specialist in Canada. Having been in business for over a decade and handling over 40 million dollars in transactions a year. Currency Mart carries over 70 different currencies in stock, currently has branches in both Manitoba and Ontario with physical shops open 7 days a week.

    The attractions of Currency Mart are always better than banks' rate, instant availability, and online order nationwide delivery. Regardless if you are a traveler and need to sell/buy foreign currency banknotes, or if you are an investor, business owner, or local resident with demand of foreign currency in non-cash(i.e.USD, EUR, GBP, JPY, CHF, AUD, MXN, etc.) for personal/business purposes, you could always find the best deal from Currency Mart.

    Currency Mart rates webpage: Currency Mart foreign exchange rates convertor

How are exchange rates calculated and determined?

Currency exchange rates are influenced by many factors of the country, six main ones are the following:

  • Differentials in interest rates
  • Differentials in inflation
  • Terms of trade
  • Political stability and economic performance
  • Current-account deficits
  • Public debt

What is currency pair?

Currencies must be traded in pairs. They are the national currencies from two countries and are used to trade on the foreign exchange (FX) market. Both currencies must have their own exchange rates, and transactions will be based on these rates. All transactions in the foreign exchange market, whether they are selling, buying or trading, will be conducted through currency pairs.

How are exchange rates quoted?

Here we use euro vs. Canadian Dollar exchange as an example. If the EUR/CAD currency pair is 1.491, it means that to purchase 1 EUR requires 1.491 Canadian dollars. In the euro/Canadian dollar exchange, the first currency listed (EUR) in a forex pair is called base currency and it always represents one unit of that currency; the exchange rate shows how much the second currency, aka quote currency(CAD) is required to purchase the base currency (EUR). This exchange rate tells you how much it costs to buy one euro with Canadian dollars.

To understand the cost of buying 1 CAD $ in Euro, simply use the formula: 1/Exchange rate. In this example, 1 / 1.491 = 0.6707. Meaning that it will cost 0.6707 Euro to buy one Canadian dollar.

Best forex trading time

Globally there are four major forex exchange sessions and they are: London, New York, Sydney, and Tokyo.

The best time to conduct foreign currency trades are:

  • When the market is at its most active level. That's when the trading spread-the difference between the selling and buying price tends to shrink. Usually middle of the week shows the most movement, and

  • When two currency exchange sessions are overlapping.

Most commonly traded currency pairs in forex market

Currency trading usually involves the following 18 pairs, and in FX market, they represents the majority of the trading volume:

  • USD/CAD
  • AUD/CAD
  • EUR/CAD
  • EUR/USD
  • USD/CHF
  • GBP/USD
  • AUD/USD
  • AUD/JPY
  • AUD/NZD
  • NZD/USD
  • USD/JPY
  • EUR/AUD
  • EUR/JPY
  • EUR/CHF
  • EUR/GBP
  • GBP/CHF
  • GBP/JPY
  • GBP/JPY

Most overseas travellers need to exchange currency at some point during the trip. If you don't know these tips, foreign currency exchange can be very pricey. Trading currencies in hotels or even currency kiosks in the airports can be expensive, including low exchange rates and high fees. With that in mind, there is nothing better than returning home from a trip abroad to think of sticking to a budget wisely, only to pay unexpected currency exchange fees on bank statements and credit card bills. Therefore, travellers should consider exchanging their currency before starting to travel.

US Dollar picture

How to spot counterfeit money

Compare the feel and texture of the paper with other banknotes that you know are authentic. And visit the central bank’s website that issues the banknotes and find out the security features that they incorporated in their bills.Usually banknotes contain at least few or all of the following characteristics:

  • Vertical strip: banknotes could contain text spelling out the denomination of the banknote;
  • Color-shifting ink: hold a bill and tilt it back and forth, and observe the color of the number in the lower corner will change;
  • Watermark: look at a banknote with light behind it, and find the watermark. The watermark can be seen from both sides of the banknote because it is not printed on the banknote, but embedded on the paper;
  • Security Thread: Hold the banknote close to a lamp and find the safe thread;
  • Microprinting: widely used anti-counterfeiting technique. A production of recognizable patterns or characters in print media at a scale that requires magnification to be read with the naked eye;
  • Fine Line Printing Patterns: Very thin lines added behind the portrait and on the reverse side scene to make it more difficult to reproduce;
  • Ultraviolet Glow: Many banknotes today are printed partly using inks containing UV-fluorescent phosphors that glow when exposed to ultraviolet light.

Most overseas travellers need to exchange currency at some point during the trip. If you don't know these tips, foreign currency exchange can be very pricey. Trading currencies in hotels or even currency kiosks in the airports can be expensive, including low exchange rates and high fees. With that in mind, there is nothing better than returning home from a trip abroad to think of sticking to a budget wisely, only to pay unexpected currency exchange fees on bank statements and credit card bills. Therefore, travellers should consider exchanging their currency before starting to travel.

Key points

Due to the high cost of money exchange, travellers should consider currency exchange before traveling. Once in a foreign territory, the best way to exchange currency is to find a local currency exchange store/shop. Avoid using the exchange bureaus at airports, train stations, and touristy areas. Many credit and debit card issuers also allow people to purchase in foreign currencies, but their rates are usually poor and they also charge transaction fees.

If you are planning a trip, before you do anything, research the exchange rate. If you do some homework by checking the exchange rate before departure, you will save a penny.No matter where you go, take time to shop around. Read the published mid-market exchange rates for the currency pair carefully, and ask for any commissions charged for the services. Some commissions are charged per transaction per item, and some are charged as a percentage.

Always use the calculator on your smartphone to determine if the price you get is reasonable.

Last but not least, check all the counterfeit features on the bills to ensure that they are real. You should not encounter this problem at a reputable bank or currency exchange shop.

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