# How do I convert dollars to pounds, euros to yen, or francs to dollars, etc.?

A:

Currency can be converted using an online currency exchange or it can be converted manually. To use either method, you must first look up the exchange rate using an online exchange rate calculator or by contacting your bank. Be aware that the rates charged by your bank may differ from those you see online because banks earn small profits on exchanges, whereas online rates are the same as those quoted between banks.

In addition, it is important to note that the exchange rate you get when trading one currency against another probably will differ from the rate you will obtain during the actual conversion of one currency into another at a local bank. Traders can access the tight bid-ask spreads that are posted by banks amongst each other, but visitors to foreign countries who require local currency will pay slightly higher prices for the same currency. For example, an online EUR/USD (euro against the dollar) may appear as 1.5560 - 1.5563, which means banks are selling to each other at 1.5563, but are buying from each other at 1.5560. The spread (or difference) of three pips (points) is the profit banks realize for facilitating this transaction.

Let's conduct a dollar-to-euro conversion, for example. First, look up the exchange rate online, which will be quoted as the amount \$1 can buy in euros or as the amount one euro will buy in dollars. If \$1 buys 0.6250 euros, then \$10,000 would equal 6,250 euros (because 10,000 x 0.6250 = 6,250). If the quote states that one euro buys \$1.60, then \$10,000 still would equal 6,250 euros (because 10,000/1.6000 = 6,250).

(For more on this topic, see The Impact of Currency Conversions.)

RELATED FAQS
1. ### How do you make money trading money?

How someone makes money in forex is a speculative risk: you are betting that the value of one currency will increase relative ... Read Answer >>
2. ### When and why did the euro make its debut as a currency?

On January 1, 1999, the European Union introduced its new currency, the euro. Originally, the euro was an overarching currency ... Read Answer >>
3. ### How are international exchange rates set?

International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency ... Read Answer >>
4. ### What is the value of one pip and why are they different between currency pairs?

In forex markets, currency trading is done on some of the world's most powerful currencies. The major currencies traded are ... Read Answer >>
5. ### What is foreign exchange?

Foreign exchange, or Forex, is the conversion of one country's currency into that of another. In a free economy, a country's ... Read Answer >>
6. ### What types of companies benefit from reporting results utilizing constant currencies ...

Understand constant currency figures, and explore some of the reasons why a company is likely to benefit from reporting using ... Read Answer >>
Related Articles
1. Personal Finance

### The Worst Place to Exchange Currency

Exchanging currency is a necessary part of traveling, but not all currency exchanges are created equal.
2. Trading

### How Are International Exchange Rates Set?

International exchange rates show how much one unit of a currency can be exchanged for another currency.
3. Personal Finance

### Best Ways to Exchange Currency

How to avoid fees and get the best deal for your dollar.
4. Investing

### 3 Strategies to Mitigate Currency Risk (EUFX)

Discover the often overlooked risk known as currency risk, and learn three strategies to mitigate or eliminate it in your portfolio.
5. Trading

### Understand the Indirect Effects of Exchange Rates

Exchange rates have a tremendous influence on the economy. Exchange rates can indirectly affect many of the most important aspects of our lives.
6. Trading

### The Forex Market: Who Trades Currency And Why

The forex market has a lot of unique attributes that may come as a surprise for new traders.
7. Trading

### The Impact Of Currency Conversions

Will a rising or falling dollar hurt you or your company? In this article we explore the impact of currency converisons on consumers, comanies, and countries.
8. Trading

### 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.
RELATED TERMS
1. ### Conversion Rate

The ratio at which one currency can be exchanged for another. ...
2. ### Universal Currency Converter

A program that allows for the quick conversion of currencies ...
3. ### International Currency Converter

An electronic program that allows for the quick conversion of ...
4. ### Online Banking

The performance of banking activities via the Internet. Online ...
5. ### Currency Exchange

Travelers looking to buy foreign currency can do so at a currency ...
6. ### Electronic Currency Trading

A method of trading currencies through an online brokerage account. ...
Hot Definitions
1. ### Security

A security is a fungible, negotiable financial instrument that represents some type of financial value, usually in the form ...
2. ### Volatility

1. A statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured ...
3. ### Correction

A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation. ...
4. ### Short Selling

Short selling is the sale of a security that is not owned by the seller or that the seller has borrowed in the hope that ...
5. ### Market Capitalization

The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
6. ### Gross Margin

A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
Trading Center