Understanding how exchange rates work is essential for international travel, global business, and forex trading. An exchange rate tells you how much one currency is worth in terms of another.
The Basic Conversion Formula
To convert an amount from your starting currency (Base) to a target currency (Quote), you use this simple mathematical formula:
Initial Amount × Exchange Rate = Converted Total
Determining the Rate From Two Prices
If you have a price in two different currencies and want to find the implied exchange rate, use this division formula:
Price in Target Currency / Price in Base Currency = Exchange Rate
Practical Examples
Example 1: You want to convert 500 Euros (EUR) to US Dollars (USD). If the current rate is 1.10, the math is: 500 × 1.10 = 550 USD.
Example 2: You want to convert 10,000 Japanese Yen (JPY) to USD. If the rate is 0.0067, the math is: 10,000 × 0.0067 = 67 USD.
Key Terms to Know
Base Currency: The currency you are starting with (always represented as "1" in a rate quote).
Quote Currency: The currency you are converting into.
The Spread: This is the difference between the "Buy" and "Sell" price. Most banks and exchange kiosks add a small percentage to the market rate to cover their service fees. When calculating for travel, always use the "Sell" rate provided by your bank.
function calculateCurrencyExchange() {
var amount = document.getElementById("initialAmount").value;
var rate = document.getElementById("exchangeRateValue").value;
var resultDiv = document.getElementById("exchangeResult");
var summary = document.getElementById("conversionSummary");
// Validate inputs
var numAmount = parseFloat(amount);
var numRate = parseFloat(rate);
if (isNaN(numAmount) || isNaN(numRate) || numAmount <= 0 || numRate <= 0) {
summary.innerHTML = "Please enter valid positive numbers for both the amount and the exchange rate.";
resultDiv.style.display = "block";
return;
}
// Calculation logic
var convertedTotal = numAmount * numRate;
// Formatting results to 2 decimal places for money
var formattedTotal = convertedTotal.toLocaleString(undefined, {
minimumFractionDigits: 2,
maximumFractionDigits: 4
});
var formattedAmount = numAmount.toLocaleString(undefined, {
minimumFractionDigits: 2
});
// Update display
summary.innerHTML = "Converted Total: " + formattedTotal + "" +
"Calculation: " + formattedAmount + " units × " + numRate + " rate";
resultDiv.style.display = "block";
}