What are Currency Exchange Rates and How do They Affect your Payments?

Key takeaways

• A currency exchange rate is the price of one currency in another (for example, how many euros you get for one U.S. dollar). That price moves constantly as currencies are traded around the world.¹

• The mid-market rate is the “real” rate you see on XE charts or Google. Most banks and providers add a markup on top of this rate, plus fees—so the rate you get is usually different.²

• Xe helps by showing live rates and clear pricing before you send, so you can see how the exchange rate affects what your recipient gets and decide if now is the right time to transfer.⁴

What is a currency exchange rate?

A currency exchange rate is simply:

How much of one currency you get when you exchange another.

Example:

• If the rate is 1 USD = 0.90 EUR, one U.S. dollar buys €0.90.

• If it moves to 1 USD = 0.87 EUR, that same dollar buys less euros.

Behind the scenes, banks, companies, and investors are trading currencies all day long. Global currency trading now reaches trillions of dollars per day, which is why rates wiggle around all the time.¹ ³

You don’t see that trading directly. You just see the result: the rate your bank or provider offers when you send money.

Mid-market rate vs the rate you actually get

When you search for a rate online (for example, in the Xe app or on Google), you’re usually seeing the mid-market rate.

The mid-market rate (also called the interbank rate)

• It’s the midpoint between the prices big financial institutions are willing to buy and sell a currency for at a given moment.

• It’s widely used as the “fair” market rate.²

• It’s the rate you see on many public charts and trackers.

The rate you’re quoted for your transfer

When you actually send money, your provider usually:

• Starts from the mid-market rate, then

• Adds a markup (their margin), and

• May add separate fees on top.

So your real cost is:

Total cost = Exchange rate (including markup) + All fees

Two providers can show the same mid-market rate on their website, but give you very different send rates and fees.

Here’s a simple example for a $1,000 transfer from USD to EUR:

Provider B looks “fine” on the surface, but your recipient gets €40 less than the mid-market rate would suggest—and €20 less than Provider A—because of a slightly worse rate and a small fee.²

On big amounts (like tuition or a home deposit), those differences really add up.

Why exchange rates move

Exchange rates move for lots of reasons. You don’t need to track every headline, but it helps to know the basics.

Common drivers include:¹

• Interest rates – Higher interest rates can attract investors to a currency, pushing its value up.

• Inflation – If prices rise quickly in a country, its currency may lose value over time compared to others.

• Economic news – Strong growth, jobs data, or trade numbers can boost a currency; weak numbers can hurt it.

• Politics and global events – Elections, conflicts, trade disputes, and unexpected shocks can cause sharp short-term moves.

The key idea:

Even small shifts in the exchange rate can change how much your payment costs—especially for larger transfers.

What this means when you send money

When you’re ready to send money abroad, exchange rates affect three big things:

1. How much your recipient actually gets

Because of rate markups and fees, your recipient might receive less than you expect if you only look at the mid-market rate.²

That’s why it’s useful to check:

• The rate you’re being offered

• Any fee

• The final “recipient gets” figure in their currency

2. Whether it’s worth waiting or sending now

Your decision often comes down to:

• Urgency – If rent is due tomorrow or it’s an emergency, it may make sense to send at today’s rate and focus on speed and certainty.

• Flexibility – If your payment is due in a few weeks, you might choose to watch the rate for a bit, or use tools like rate alerts or limit orders (where available) to target a better rate.

Trying to perfectly “time the market” is hard—even for professionals.³ A more realistic goal is to send at a rate that fits your budget and deadline, rather than chasing the absolute best possible number.

3. Your budget over time

The World Bank regularly tracks how much it costs to send money overseas. Globally, people still pay an average of around 6–7% once you add up fees and rate markups.⁴

If you send money often—every month to family, or several times a year for tuition or a mortgage—small savings on the exchange rate and fees can make a noticeable difference to your budget over a year.

How Xe helps you deal with exchange rates

Xe’s whole job is to make exchange rates easier to understand and live with when you move money.

Here’s how:

See live market rates before you send

You can use Xe to see live mid-market rates for hundreds of currency pairs, even if you’re not ready to send yet. It’s a quick way to know where the market is sitting and whether today’s rate looks better or worse than usual.² ⁴

Know your rate and costs upfront

When you set up a transfer with Xe, you’ll see:

• The exact rate you’re being offered

• Any fee (if applicable)

• How much your recipient will get in their currency

That transparency makes it easier to compare Xe with your bank or other providers and choose what works best for you.⁴

Use tools to plan bigger or future transfers

For larger transfers or payments you don’t need to send immediately, Xe offers tools (availability can depend on your location) like:

• Rate alerts – Get notified when a currency hits your chosen level.

• Market/limit orders – Ask Xe to automatically go ahead if the market hits a rate you’ve set, so you don’t have to watch charts all day.

Together, these features help you line up your timing, budget, and peace of mind when exchange rates are moving around.

FAQ

What’s the difference between an exchange rate and a fee?

The exchange rate is how much of the other currency you get; a fee is an extra amount the provider charges (for example, $2.99 per transfer). Your true cost is a combination of both.

Why is the rate on my bank statement different from what I saw online?

You probably saw the mid-market rate online. Your bank or provider usually adds a markup on top of that rate for your actual transfer.¹ ²

Can I get the mid-market rate myself?

The pure mid-market rate is typically used between big financial institutions trading huge volumes. Consumer and business transfers almost always include some markup plus any fees. The key is to choose a provider where the markup + fees stay reasonable and transparent.²

How often do exchange rates change?

Constantly. In major currency pairs, rates can move every few seconds during market hours. Most apps and charts (including Xe’s) update regularly so you can see if the market is shifting in your favour or not.³

Is there a “best” time of day to send money?

Not really. For most people, what matters more is:

• How urgent the payment is

• Whether today’s rate keeps your transfer within budget

If you’re not in a rush, you might watch rates for a while or use alerts and orders to help you aim for a better rate instead of guessing.

Citations

¹ Bank for International Settlements — “Triennial Survey shows foreign exchange trading averaged $7.5 trillion per day in April 2022” — (2022)

² Wise — “The Mid-Market Exchange Rate: What It Is and Why It Matters” — (2025)

³ Bank for International Settlements — “The global foreign exchange market in a higher-volatility environment” — (2022)

⁴ World Bank — “Remittance Prices Worldwide – Issue 49” and RemittancePrices.WorldBank.org data on global average remittance costs — (2024–2025)

⁵ Xe Help Centre — “Fees, rates and sending limits” — (2025)

The information from these sources were taken on December 15, 2025.

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Disclaimer:
This blog is for general information only and does not constitute financial, investment, legal, or tax advice. Exchange rates, fees, and features can change and may vary by country, currency, or provider. Always check the latest details in the Xe app or on the Xe website before making a transfer, and consider speaking to a qualified professional if you need personalised advice.