What is the Mid-Market Exchange Rate?
If you operate an ecommerce business, it’s likely you’ll have to interact with overseas suppliers at some point — whether it’s because you can’t acquire the stock or materials you need within the US, or because you can find a better price for them abroad. Additionally, as your business grows, you may need to interact with customers based in other countries as well. During these interactions, the question of different currencies and exchange rates could become a problem.
Your overseas customers will want to pay in their own currency, while your suppliers will want to receive payment in their own currency as well. Meanwhile, you’ll need US currency to pay all your domestic bills. To ensure you don’t lose profits when you’re transferring between different currencies, you’ll need to learn about the mid-market exchange rate.
In this article, we’ll help you understand what the mid-market exchange rate is, and how it can help you maximize the amount of dollars you receive from selling foreign currencies (and vice versa). Read on to learn more.
What is the Mid-Market Exchange Rate
The mid-market exchange rate is the midpoint between the buy and sell prices of any two currencies. It’s also referred to as the ‘interbank’ or ‘middle rate’.
For example, say Bank A buys 1 GBP for 1.20 USD, and sells 1 GBP for 1.30 USD. The mid-market exchange rate in this example would be 1.25. Calculating the rate is generally quite simple, but a general formula would be:
(Buy Price + Sell Price) ÷ 2 = Mid-Market Exchange Rate
Keep in mind that the mid-market exchange rate is in a constant state of flux, since the buy and sell rates are constantly changing based on the demand for and supply of a particular currency. As such, don’t expect the rate you saw yesterday to be the same today — you’ll need to always keep one eye on the mid-market exchange rate if you’re changing currencies often.
What is the Difference Between A Competitive Exchange Rate and the Mid Market Exchange Rate?
Unfortunately, private individuals and businesses (like yourself) that plan to buy and sell currencies usually won’t be able to do so at the mid-market exchange rate. The mid-market rate is typically only used by banks trading currency with each other — this is why it’s often referred to as the interbank rate.
So the mid-market exchange rate is the best possible exchange rate, but it’s not typically accessible. Instead, you’ll want to look for a “competitive” exchange rate. It won’t be as good as the mid-market rate, but it can often be very close.
Find Great Exchange Rates With Zyla
At Zyla, we’re experts in international exchange and overseas currency transfers. We use the most up-to-date exchange information available, so that the buy and sell prices we offer you are as close to the mid-market exchange rate as possible.
Zyla multi-currency accounts help you save time and money by allowing you to hold multiple currencies until the exchange rate is in your favor. What’s more, we don’t require any up-front payments or subscription fees for you to open an account with us.
Interested? Sign up for your free Zyla account today and start enjoying the benefits of our easy-to-use international money transfer platform.
If you have any questions, don’t hesitate to get in touch with our team.
Suggest changing this to “buy and sell goods or services in different currencies” This more clearly reflects that the focus is on transactions involving goods and services in different currencies, rather than the direct buying and selling of the currencies themselves.
