function calculateExchangeMargin() {
var marketRate = parseFloat(document.getElementById('marketRate').value);
var offeredRate = parseFloat(document.getElementById('offeredRate').value);
var resultArea = document.getElementById('resultArea');
var percentageDisplay = document.getElementById('percentageDisplay');
var explanationText = document.getElementById('explanationText');
if (isNaN(marketRate) || isNaN(offeredRate) || marketRate <= 0 || offeredRate <= 0) {
alert('Please enter valid positive numbers for both rates.');
return;
}
// Margin % = ((Market Rate – Offered Rate) / Market Rate) * 100
// We use absolute difference to handle rates quoted in both directions
var difference = Math.abs(marketRate – offeredRate);
var marginPercentage = (difference / marketRate) * 100;
resultArea.style.display = 'block';
percentageDisplay.innerHTML = marginPercentage.toFixed(2) + '%';
if (marginPercentage < 0.5) {
explanationText.innerHTML = "This is a very competitive rate (Excellent).";
percentageDisplay.style.color = "#1e8e3e";
} else if (marginPercentage < 2) {
explanationText.innerHTML = "This is a standard bank markup (Fair).";
percentageDisplay.style.color = "#f9ab00";
} else {
explanationText.innerHTML = "This is a high markup. Consider another provider (Expensive).";
percentageDisplay.style.color = "#d93025";
}
}
How to Calculate Exchange Rate Percentage Margins
When you convert currency, banks and exchange services rarely give you the "real" exchange rate. Instead, they add a hidden fee by adjusting the rate in their favor. This is known as the exchange rate margin or markup.
The Exchange Rate Percentage Formula
To find out exactly how much a service is charging you in hidden fees, use the following math formula:
Imagine you are traveling and want to convert USD to EUR. You check Google and see the Real Market Rate is 1.00 USD = 0.92 EUR. However, the airport kiosk offers you a rate of 1.00 USD = 0.88 EUR.
Subtract the rates: 0.92 – 0.88 = 0.04
Divide by the Market Rate: 0.04 / 0.92 = 0.04347
Multiply by 100: 0.04347 × 100 = 4.35%
In this example, the airport is charging you a 4.35% markup on top of any flat fees they might disclose.
Why Does the Percentage Matter?
Knowing the percentage allows you to compare different providers regardless of the currency pair or the amount you are converting. While a 1% or 2% difference might seem small, it can result in hundreds of dollars lost on large transfers or business transactions.