Currency Exchange

AAA

DEFINITION of 'Currency Exchange'

A business that allows customers to exchange one currency for another currency. A currency exchange may be a stand-alone business or may be part of the services offered by a bank or other financial institution. The currency exchange profits from its services either through adjusting the exchange rate or taking a commission.


Also referred to as a foreign exchange market and a bureau de change.

INVESTOPEDIA EXPLAINS 'Currency Exchange'

The exchange rate that a currency exchange quotes is typically close to the spot rate, although the exchange will adjust this rate somewhat to ensure that it makes a profit on the transaction. Because the transaction is not conducted at the spot rate, and depending on the profit that the exchange wants to make, consumers may find that it is less expensive to incur ATM or credit card fees at the foreign destination, rather than use exchange services ahead of time.

RELATED TERMS
  1. Authorized Forex Dealer

    Any type of financial institution that has received authorization ...
  2. International Currency Exchange ...

    The rate at which two currencies in the market can be exchanged. ...
  3. Quote Currency

    The second currency quoted in a currency pair in forex. In a ...
  4. Online Currency Exchange

    An online system for exchanging one country's currency for another. ...
  5. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  6. Forex - FX

    The market in which currencies are traded. The forex market is ...
Related Articles
  1. Forex Education

    The Big Mac Index: Food For Thought

    You may have heard of this mouth-watering method of evaluating currencies, but make sure you know the whole story.
  2. Forex Education

    Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.
  3. Options & Futures

    Currency ETFs Simplify Forex Trades

    Reduce your stock portfolio's risk by trading with foreign currencies.
  4. Forex Education

    Global Trade And The Currency Market

    Learn how the Bretton Woods system got the ball rolling for world trade.
  5. Forex Education

    Trading Forex With Binary Options

    Binary options are an alternative way, with a major advantage, for traders to play the forex market.
  6. Forex

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
  7. Fundamental Analysis

    Forex Exotic Currency Trading: Risks & Rewards

    Exotic currencies are off the beaten path and are not for novices, but experienced forex investors might find the high risk-reward potential exciting.
  8. Forex Education

    Understanding The Spread in Retail Currency Exchange Rates

    Understanding how exchange rates are calculated and shopping around for the best rates may mitigate the effect of wide spreads in the retail forex market.
  9. Forex

    Main Factors That Influence Exchange Rates

    The exchange rate is one of the most important determinants of a country's relative level of economic health, and can impact your returns.
  10. Forex Fundamentals

    How To Calculate An Exchange Rate

    Struggling to get a grasp on exchange rates? Here's what you need to know.

You May Also Like

Hot Definitions
  1. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  2. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  3. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  4. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  5. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  6. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
Trading Center