Exchanging Money For Money

Each country in the world has its own money system. When people travel across national boundaries they usually need to convert the money they are carrying to the local currency. This is usually performed at a bank or Foreign Exchange Trader. The rates charged reflect the current price of that currency on world markets plus a small commission to the trader.

Although credit cards can be used just about anywhere in the developed world, It’s a good idea to change some money before you leave on your trip. You may arrive when banks or currency traders are closed and you may need money for taxis or tips.

Virtually every country uses a decimal system, that is, like our dollar and cent, the basic unit is divided into 100 parts. For example the British Pound is divided into 100 pence and the Swiss Franc is divided into 100 Rappen. Of course these units are not one for one with our dollar. The actual value depends on the exchange rate. Here is a list of very approximate exchange rates for 1 United States dollar (as of December, 2013). Note that these rates can change radically depending on market conditions

  • $1 buys about .60 British Pounds
  • $1 buys about .73 Euros
  • $1 buys about 102 Japanese Yen
  • $1 buys about 1.07 Canadian Dollars
  • $1 buys about .89 Swiss Francs
  • $1 buys about 1.10 Australian Dollars

If the economies of countries are balanced, that is trade figures and interest rates are similar, you’ll find the prices of basic items to be similar in actual cost. If they are out of balance the exchange rates will make prices unusual. For example with the dollar at about $2 against the British Pound, it costs almost $6 for a “Big Mac” at a McDonald’s in London. For British visitors it’s the opposite. They receive more dollars for their pounds when they visit the United States, making their purchases much cheaper.

In most countries today, coins are tokens and not considered legal tender. That’s a complete flip from the old system where precious metal coins were the money and currency was a receipt for coins deposited in an official institution.

Today, base metal coins are only redeemable in the country of origin and even then there can be problems. Many banks don’t want the hassle or work of having to count, or if the coins are already rolled, verify, each roll. You’ll have to have bank accounts in many countries to redeem large amounts of coins. If you do, you can redeem the coins for the full face value.

There are people that do just that. Because of the weight and labor factor they buy the coins at a steep discount, usually 50% of face or less. They deliver the coins personally to the countries of origin. Also, “foreign currency coin traders” usually are only interested in high denomination coins. They would not accept British pennies or US cents for trade. The weight factor alone makes handling low denomination coins too expensive. My suggestions is to call the foreign currency exchange dealers in your area and find out who is performing this service. These coin traders may only show up when they are delivering coins to banks in your area.