Currency Exchange

Traveling abroad, your money has to change identity first. The board says 7.2, meaning one unit of foreign money costs 7.2 local dollars. Money trades against money too, and that price is the exchange rate. All numbers in this lesson are made-up practice values.

The exchange rate: a price for money

Like apples sold by the kilogram, money is sold by the unit. Suppose 1 unit of foreign money costs 7.2 local dollars. Then:

10 foreign units cost 72 local dollars;
100 foreign units cost 720 local dollars.

One sentence captures it: foreign units × 7.2 = local dollars.

There and back again

Two directions, two operations:

Foreign to local (multiply): 50 foreign units → $50 \times 7.2 = 360$ local dollars;
Local to foreign (divide): 360 local dollars → $360 \div 7.2 = 50$ foreign units.

Afraid of flipping the direction? Check by size: since 7.2 is bigger than 1, the same value shows a bigger number in local dollars. The multiplication produced 360 (the big number), so that answer is in local dollars; the division produced 50 (the small one), so that is foreign units. One glance backward and the direction reveals itself.

Money is really just another unit table: exchanging currency works like converting kilograms or temperatures, and every instinct from Metric Units & Conversion carries over.

InteractiveCurrency Convert

→≈ 100 cm

Think of exchanging as one more unit conversion: the exchange rate is the conversion factor — type foreign units on one side, read local dollars on the other. Keep the direction straight and let multiplication and division do the rest.

Fees and the tourist rate

A bank exchanges at the posted rate and charges little extra; airport kiosks often take a bite on both ends. They buy your foreign money at a lower price (say 7.0) and sell it back at a higher one (say 7.5). Exchanging 100 foreign units should bring $100 \times 7.2 = 720$ local dollars, but the kiosk hands you $100 \times 7.0 = 700$ — 20 local dollars quietly vanish. Buying foreign money is symmetrical: 720 local dollars at 7.5 buys back only $720 \div 7.5 = 96$ foreign units. Comparing offers is the same skill as comparing big and small packages in Unit Price. For mental math at the counter, split the rate: $7.2 = 7 + 0.2$ , so multiply by 7 and add a fifth of the amount. A rough guess only needs "about 7": 15 foreign units are roughly 105 local dollars, so a counter quote of 108 (since $15 \times 7.2 = 108$ ) passes the sniff test.

Worked example: a five-day trip budget

Planning to spend 30 foreign units a day for 5 days means $30 \times 5 = 150$ foreign units. At 7.2 you need $150 \times 7.2 = 1080$ local dollars; with a 2% counter fee of about $1080 \times 0.02 = 22$ , budget roughly 1102. Rates wobble a little every day, so carry a small buffer.

Estimate before you sign

Multiply once in your head and compare your estimate with the screen. A big gap usually means a different rate or a hidden fee — ask before you exchange.

Quick quiz

1. The rate is 7.2 local dollars per foreign unit. How much do 50 foreign units bring?
2. How many foreign units do 720 local dollars buy at 7.2?
3. The posted rate is 7.2 but the counter pays only 7.0 for your foreign money. How much less do you get on 100 foreign units?