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GLOSSARY

Exchange rate

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Exchange rate definition

The foreign exchange rate describes the relationship between two currencies. It shows how much one currency is worth in exchange for another and indicates the price of a foreign currency that must be paid domestically to obtain it. The exchange rate therefore regulates the price of two currencies in relation to each other.

When does the exchange rate apply?

The exchange rate is used for numerous foreign currency transactions, including transactions with credit cards and debit cards, transfers in foreign currencies and securities trading (online trading). Foreign exchange rates are also generally used at third-party ATMs (ATMs of third-party banks). When exchanging money at bank counters, however, the banknote exchange rate is used.

When it comes to exchange rates, a distinction is made between the selling rate and the buying rate. The selling rate is the price that buyers pay, while the buying rate is the price that sellers receive.

Importance of exchange rates for SMEs in global trade

Exchange rates are vital for SMEs engaged in international trade as they influence the cost of imports, export pricing and profitability. Currency fluctuations can affect cash flow, profit margins and competitiveness, making it crucial for SMEs to manage foreign exchange risks to maintain financial stability and growth. The three main types of exchange rate risks are transaction risk, economic risk, and translation risk.

Companies can safeguard themselves by hedging against foreign exchange risk, a vital tool for enhancing transparency and predictability in financial processes. It enables businesses to plan confidently and potentially benefit from currency fluctuations by selecting the appropriate instruments.

Managing currency exchange rate risk properly

With amnis, you can hedge against exchange rate risk. You can enter a forward contract at any time and easily modify the value date to achieve complete flexibility for your currency exchange needs. This feature ensures that currency fluctuations no longer impact the profitability of your core business.

Moreover, you can sign up to our exchange rate alert and let us watch the fx markets for you. The rate alert can be set daily or based on your personal preferences.

About amnis

amnis offers a comprehensive platform for international banking, offering a range of tools in one place. Transfer money abroad, exchange currencies 24/7 and collect international money transfer with your own IBAN accounts supporting  20+ currencies. Founded in 2014 in Zurich, amnis is a regulated payment institution under the supervision of the Banking Supervision Section in Liechtenstein (FMA) within the EEA.

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