Understanding of american currency exchange rate - 04:26, Thursday, April 3, 2008

Understanding of american currency exchange rate

Foreign exchange rates are quoted in several different manners using standardized nomenclature to expedite communications and reduce misunderstandings. Exchange rates quoted on the Interbank market are akin to wholesale prices, and are available only to institutional investors that deal in large volumes of currency. Exchange rates quoted to individual investors are akin to retail prices, due to the fact that individual transaction amounts generally tend to be smaller, and the rates often include the broker’s commission, often expressed in terms of pips, ticks or basis points of american currency exchange rate.

Subject: Us Currency Exchange

4) is the use of credit cards for payment of brazilian goods a good idea??? it would appear to me that paying with a credit card may do away with the conversion "fee" since the credit card company will do the "exchange" automatically....is this correct??? is there any disadvantage to using a credit card for payment?

Regarding cash: You will get the best American currency exchange rate through an ATM machine, and you will not have to pay a fee. If you have an ATM card, talk to your bank and find out if it will work in Brazil. For example if your ATM card is a "visa check card" you should have no problems with any ATM that accepts VISA (but let your bank know in advance so they do not shut down your account when they see charges so far away from home). These machines are everywhere all over Brazil. Also, be certain that you password is no more than 4 digits (some machines have problems with long passwords).

ok... when I went to Brazil I was expecting to exchange my currency at a major bank there... but while I was laying over in JFK, I noticed a place there set up to exchange dollars into several different currencies on the spot. I have since learned that most MAJOR international airports have this feature. Also you can find several banks here that will exchange it (some have a waiting period of a few days). Usually the Service Charge is not enough to worry about.

*a traveler* has it right. The best deal is to use ATMs in Brazil. Second best is to order Brazilian currency from your bank in the US before you go. The worst rate will be with the currency exchanges in airports, or in Brazil. (Casas de Cambio) Travelers checks are ancient history.

Yes, it is best to go with a Visa credit/debit card. Things may have changed, but it was Banco do Brasil that usually had one or two ATM machnes available for getting cash withdrawls. Other larger banks in Brasil just didn't have the ATM's in the VISA network for withdrawls??? Look for the VISA logo on these machines - they are the ones that are usually hooked into a different network for processing these type of transactions. Citibank had a nice setup with their ATM's, if you can find them.

Don't even THINK about coming back with a wad of extra money that you will simply exchange at a bank or U.S. airport kiosk. Your guaranteed to lose probably 20-30% of the real value due to the low exchange price they give AND service fees. Just plan accordingly...

Unfortunately I didn't know the PIN for my credit cards - I never use them that way here, and my bank debit card was not a visa. But I discovered that if your bank card is on the CIRRUS system, you can go to Citibank to get cash, at a very good rate. If you're in Rio, there's one in Leblon, just a few blocks off the beach.

Well, those ATMS may work in Rio, but don't count on them everywhere. In Recife, a city of 2 million, I've only found one place so far where my U.S. credit cards work and sometimes the two machines that take international credit cards don't work. Recife is a city which prides itself on being a tourist attraction, but it sure is hard to make those ATMS work here. It's quite different than Europe. I was quite surprised at the difficulty after having spent five weeks in Lisbon where there were ATMs every half block. It's probably different in Rio and SP.

When I first visited Recife and other smaller places 5 years ago, this was true, and it was a nightmare. Nowadays, if you have Visa Star or Cirrus, virtually all Banco do Brasil branches have ATMs that work. The few that do not, will do a cash advance inside the bank. Don't forget to have your passport with you.

Jo, I'm not trying to argue. I was just there in April. No problem whatsoever using ATMs at Banco do Brasil in the large mall(forget the name), and 2 branches near praia Boa Viagem. Maybe just a temporary problem. In April, I also got cash from a Banco do Brasil ATM in Assu, a tiny farming town in the middle of nowhere. Are you saying that you cannot get cash even inside the bank??

I primarily use Banco do Brasil because I have an account there ... I work at the American School, but I hate going to the bank and usually go to the big mall you mention, Shopping Recife. The only two machines in the whole place that I can get to take my cards are in the Banco do Brasil and half the time they do not work for international cards. True, I am usually using Mastercard, but I've tried the Visa and have had the same problem. Same thing for the ones at the airport that say 24 hours. These are recent, normal U.S. credit cards. I find it puzzling, and, I think it could hurt their tourist trade.

Explanation Of Exchange Rate

You have asked for the exchange rate between the United States dollar and a currency of another country of the Americas for a given year or years. The exchange rate is the price of the U.S. dollar in terms of the foreign currency: the number of units of foreign currency that it took to buy one dollar, or that one obtains in exchange for one dollar. A higher exchange rate denotes a stronger dollar; the dollar has appreciated (gained value) compared to the foreign currency. For example, considering Argentina, the dollar appreciates from GP 0.97 (0.97 gold pesos) in 1916 to GP 1.00 in 1917. A lower exchange rate denotes a weaker dollar; the dollar has depreciated (lost value) relative to the foreign currency. Again considering Argentina, the dollar depreciates from PMN 3.06 (3.06 pesos moneda nacional) in 1935 to PMN 3.02 in 1936.

The importance of the exchange rate is that it enables conversion of a foreign price or value into dollars, and also a dollar price or value into the foreign currency. The foreign magnitude is divided by the exchange rate to obtain the dollar equivalent; because the inverse of the exchange rate is the number of dollars per unit of foreign currency. For example, for Argentina in 1935, the inverse exchange rate, 1/(PMN 3.06) = $0.3268, is the number of dollars per peso moneda nacional. An Argentinian good that cost PMN 100 in that year would also be worth PMN 100 x $0.3268 = $32.68. Similarly, a dollar price or value can be expressed in Argentinian currency by multiplying the dollar magnitude by the exchange rate.

Changes In Currency Units

Of the eight countries, five-- Argentina, Brazil, Chile, Mexico, and Peru -- experienced one or more changes in currency unit during the period spanning the observations for the country. The currency unit for the exchange rate in a given year is the unit in existence for that year. When a new currency unit is instituted at any time other than January 1, the exchange rate is expressed in the unit ruling during the greater part of the year; the full-year exchange rate experience is incorporated (data permitting), via conversion of the unit pertaining to the lesser part of the year. For example, the Peruvian monetary unit switched from the sol to the inti on February 1, 1985. For most of 1985, the inti was the monetary unit; therefore the exchange rate is expressed as the number of inti per dollar. Specific changes in currency units for each country are as follows.

Argentina: Federal Reserve quotations switched from the gold peso to the paper peso (peso moneda nacional) on December 13, 1933, where 1 peso moneda nacional = 0.44 gold peso. On January 1, 1970 the monetary unit of Argentina was changed from the peso moneda nacional to the peso, where 1 peso = 100 pesos moneda nacional. On June 1, 1983 the monetary unit became the (old) peso argentino, where 1 peso argentino = 10,000 pesos. On June 14, 1985 the monetary unit became the austral, where 1 austral = 1000 pesos argentino. On January 1, 1992 the austral was replaced by the (new) peso argentino, where 1 peso argentino = 10,000 australes. The exchange rate is expressed as gold pesos per dollar in 1916-1933, pesos moneda nacional per dollar in 1934-1969, pesos per dollar in 1970-1982, old pesos argentino per dollar in 1983-1984, australes per dollar in 1985-1991, and (new) pesos argentino per dollar in 1992-1999.

Brazil: In 1942 the name of the monetary unit of Brazil was changed from the milreis to the cruzeiro. On February 13, 1967 the monetary unit became the new cruzeiro, where 1 new cruzeiro = 1000 old cruzeiros; and on May 15, 1970, the new cruzerio was renamed the cruzeiro. On February 28, 1986 the monetary unit was changed to the cruzado, where 1 cruzado = 1000 cruzeiros. On January 15, 1989 the new cruzado was established, where 1 new cruzado = 1000 old cruzados. On March 16, 1990 the (again new) cruzeiro replaced the cruzado, where 1 cruzeiro = 1 cruzado. On August 1, 1993 the monetary unit became the cruzeiro real, where 1 cruzeiro real = 1000 cruzeiros. On July 1, 1994 the monetary unit was changed to the real, where 1 real = 2750 cruzeiros reais. The exchange rate is expressed as milreis per dollar in 1916?1941, old cruzeiros per dollar in 1948-1966, (new) cruzeiros per dollar in 1967-1985, cruzados per dollar in 1986?1988, new cruzados per dollar in 1989, (again new) cruzerios per dollar in 1990-1993, cruzeiros reais per dollar in 1994, and reais per dollar in 1995-1999.

Chile: On January 1, 1960 the monetary unit of Chile was changed from the (old) peso to the escudo, where 1 escudo = 1000 (old) pesos. On September 29, 1975 the peso replaced the escudo, where 1 peso = 1000 escudos. The exchange rate is expressed as old pesos per dollar in 1917-1959, escudos per dollar in 1960-1975, and pesos per dollar in 1976-1999.

Mexico: Federal Reserve quotations switched from the gold to the silver peso on July 30, 1931. Data prior to 1932 pertain to the gold peso, not compatible with the series from 1932. On January 1, 1993, the monetary unit of Mexico was changed from the old peso to the (new) peso, where 1 peso = 1000 old pesos. The exchange rate is expressed as old pesos per dollar in 1921?1992 and pesos per dollar in 1993-1999.

Peru: On February 1, 1985, the monetary unit of Peru was changed from the sol to the inti, where 1 inti = 1000 soles. On July 1, 1991, the new sol replaced the inti, where 1 new sol = 1,000,000 intis. The exchange rate is expressed as soles per dollar in 1948-1984, intis per dollar in 1985?1990, and new soles per dollar in 1991-1999.