Foreign currency conversion involves changing money from the kind used in one country to the kind used in another country.
The amounts of money received depend on foreign currency exchange rates and currency conversion fees.
For the purposes of this lesson we'll assume that any money exchanged is not subject to a conversion fee.
A US citizen travels to Europe on business. Before leaving home, she decides to change one thousand US dollars ($1000) into Euros (€).
Say the exchange rate is $1 = €0.75. The amount of money received in Euros will be
1000 x 0.75 = €750
Similarly, $500 could be exchanged for 500 x 0.75 = €375, while $2000 converts to 2000 x 0.75 = €1500.
How much money would be received in British pounds (£) for three thousand Chinese Yuan Renminbi (¥3000) given a rate of exchange ¥1 = £0.10?
3000 x 0.10 = £300
Next, if a gentleman receives fifty five thousand Indian Rupees (₹55000) for his one thousand Australian dollars ($1000), what's the exchange rate?
$1000 = ₹55000
(divide both figures by 1000)
$1 = ₹55
A Canada-based computer enthusiast orders a part for his desktop from China. The part costs ¥800 - what's this in Canadian dollars if ¥1 = $0.17?
800 x 0.17 = $136
Work out the exchange rate if one thousand British pounds (£1000) can be changed into one thousand two hundred and fifty Euros (€1250)
£1000 = €1250
(divide both figures by £1000)
£1 = €1.25
If one US dollar ($1) is equal to both 2.20 Brazilian Reals (R$2.20) and 45 Philippine Pesos (₱45), is R$55 or ₱900 of greater value when converted to US dollars?
First change R$55 into US dollars
55 / 2.20 = $25
Then convert ₱900 to US dollars
900 / 45 = $20
i.e. R$55 is of greater value than ₱900 when changed into US dollars.
Keep an eye out at currency exchanges, when reading the newspaper or surfing the internet for charts or tables showing conversion rates.
Use these rates to practice your own calculations and see how figures in one currency convert into another.
Who knows, you may even get to exchange some real money if you're going on your travels!
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Foreign currency conversion