Globally registered and regulated
FCA registration number 900918. 3S Money Club Limited is registered in England and Wales, Company Number 8574246. Dubai Financial Services Authority (DFSA) with DFSA reference number F007004. CSSF registration number W00000016. 3S Money (Luxembourg) S.A. is registered in Luxembourg, R.C.S number B245715
How are foreign exchange rates calculated?
The foreign exchange rate decides the worth of one currency compared to another, which can impact the amount of money that a business receives or pays while converting currencies.
Therefore, it is crucial for any global enterprise to monitor the foreign exchange rate closely to ensure that they make informed decisions when it comes to currency exchange.
What is the foreign exchange rate?
The exchange rate is the rate at which one currency will be exchanged for another currency.
It’s something many are familiar with when we go on holiday and have to exchange our native currency into that of the destination country. Because some currencies are stronger than others, the money in one country can convert to a very different amount in another.
Here's an example: if you live in the UK and want to convert 100 pounds (GBP) into Euros (EUR) and the exchange rate is 1.20, then you get 120 EUR.
The stronger the starting currency is, the more you get when converted and vice versa if it is weaker.
What's the difference between a floating and fixed exchange rate?
Floating exchange rate
This is determined through the open market, based on supply and demand as established by investors. If demand for a currency goes up, then the value of it increases, resulting in a stronger exchange rate.
If demand is low, then its rate drops. What impacts this supply and demand is a complex web of economic and political factors, including things such as changes to interest rates, unemployment, inflation, movements in gross domestic product (GDP) and so on.
Fixed exchange rate
Some countries choose to fix their exchange rate by tying its currency to another country’s currency.
This keeps the foreign exchange rate for the native currency more certain, but has particular impacts on what a central bank can do in terms of adjusting interest rates and other issues.
In general, most industrialised nations have a floating exchange rate, whereas smaller and developing nations may choose to fix or ‘peg’ their currency to a major currency like the US dollar.
Who sets the foreign exchange rate?
The setting of exchange rates is complex, but as explained earlier is essentially decided by supply and demand of a currency, which in turn is dictated by the behaviour of investors.
In the UK alone, foreign currency trades of more than 1 trillion GBP are made everyday. These trades set the exchange rate for the pound, which is then used by banks and foreign exchanges.
Central banks in nations can influence the foreign exchange rate, such as when interest rates are changed or by pegging the currency to another currency. The overall stability and perceived safety of a country’s economic and financial system also has an impact.
Is there a maximum amount I can exchange with 3S Money?
No, there's no limit on the value or amount of funds you can exchange.
With the help of our in-house FX team, you can access live rates 24/7 and convert in real time from over 65 currencies, including USD, EUR, and GBP, all with instant settlement through your Client Portal.
Last updated: 02/05/24
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© 3S Money Club Limited 2019-2024. All rights reserved. 3S Money and 3s.money are trading names of 3S Money Club Limited. 3S Money Club Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for issuing of electronic money and the provision of payment services with FCA registration number 900918. 3S Money Club Limited is registered in England and Wales, Company Number 8574246, with its registered office address at 45 Folgate Street, London, E1 6GL, United Kingdom. 3S Money Club Limited is registered with The United Kingdom Information Commissioner's Office with ICO registration number ZA495485. 3S Money Club Limited (DIFC Branch) is regulated by the Dubai Financial Services Authority (DFSA) with DFSA reference number F007004, authorising it under Article 48 of the Regulatory Law 2004 to carry on the Financial Services comprised in Issuing Payment Instruments and Providing or Operating a Payment Account. 3S Money Club Limited (DIFC Branch) is registered in Dubai International Financial Centre, Licence Number CL5587, with its registered office address at Central Park Towers, Office 17-37, DIFC, Dubai, UAE. 3S Money (Luxembourg) S.A. is authorised by the Commission de Surveillance du Secteur Financier (CSSF) under the law of 10 November 2009 on payment services for issuing, distribution and refund of electronic money with CSSF registration number W00000016. 3S Money (Luxembourg) S.A. is registered in Luxembourg, R.C.S number B245715, with its registered office address at 25C, Boulevard Royal, L- 2449, Luxembourg, Grand Duchy of Luxembourg