Have you ever confused with currency exchange especially when you want to buy certain country’s currency in the money changer counter before you travel? Should you aim for lower or higher price?
There are only 4 things you should able to see from money changer counter: Date, Unit, Currency, Buying and Selling prices. Here is the example:
|Unit||Currency||We Buy||We Sell|
|1||Great Britain Pound||4.880||4.935|
Before you go into this, the first thing you need to know is the base currency. The base currency should be the currency based on the country where you exchange your money. For example, if you go to the money changer in Malaysia, the base currency will be in MYR – Malaysia Ringgit. If you exchange your money in China, then the base currency will be based on the Chinese RMB then.
The table above is an example that you can see from the money changer in Malaysia (the base currency is MYR). The table tells you that you need RM3.035 to exchange with 1 US dollar and RM46.650 to exchange with 100 Chinese RMB. Look at the “We Sell” column whenever you want to buy and look at the “We Buy” column whenever you want to sell. The formula is very easy:
You want to sell foreign currency and get back the MYR, this is how much you should get:Money that you want to exchange in base currency(MYR) / We Sell (Buying Price) X Unit
Money that you want to exchange in target currency(Foreign $) X We Buy (Selling Price) / Unit
Example 1: You want to exchange RM10K to USD. You should able to get:
RM10K/3.035 X 1 = USD 3,294.89
Example 2: You want to exchange RM10K to RMB. You should able to get:
RM10K/46.65 X 100 = RMB 21,436.23
Example 3: You want to exchange USD10K to MYR. You should able to get:
USD10K X 3.015 / 1 = RM 30,150
Example 4: You want to exchange RMB10K to MYR. You should able to get:
RMB10K X 46.00 / 100 = RM 4,600
Key Notes: The lower of the buying price (we sell) or the higher of the selling price (we buy), the more money that you will be getting back after the conversion. Thus, if you want to compare with different money changers, look at the lowest buying price (we sell) and highest selling price (we buy) that they can offer. It is a similar concept with buy low and sell high. If you want buy, look for the lowest price. If you want to sell, look for the highest price.
Happy traveling! :)
p/S: The different between the selling & buying price is where the money changer makes their money!