We know that exchange rate refers to the ratio or price ratio of one country’s currency to another country’s currency, or the price of another country’s currency expressed in one country’s currency.
In the international market, almost all currencies have an exchange rate against the US dollar. The exchange rate between a non-US dollar currency and another non-US dollar currency often needs to be calculated through these two exchange rates against the US dollar. The exchange rate calculated by this set is called a cross exchange rate. A distinctive feature of cross exchange rates is that an exchange rate involves the exchange rate between two non-US dollar currencies. A currency pair that uses a cross exchange rate becomes a cross in foreign exchange transactions, such as the British pound against the RMB.
What is the exchange rate conversion formula?
The usual exchange rate is generally calculated based on the central parity of the RMB exchange rate, that is, the average price of the buying price of the current exchange plus the selling price. Specifically, it is divided into direct and indirect.
Calculation method 1: direct price exchange rate
That is, the domestic currency is used to represent a fixed unit of foreign currency. For example, 100 foreign currency = 804 RMB, then the exchange rate is equal to the number of domestic currency divided by the number of foreign currencies, which is marked as 8.04.
Calculation method 2: Indirect price exchange rate
That is, foreign currency is used to express a fixed unit of domestic currency, such as 1 RMB = 0.124, a foreign currency, and the exchange rate is 0.124.
Generally speaking, countries all over the world adopt the first method to calculate.
For example, as the most important international currency, the U.S. dollar is converted into RMB using a direct exchange rate, which is usually calculated according to the median price announced by the foreign exchange department of the country. It should be noted that there is no handling fee for the conversion of RMB to the bank. , Because the buying price and selling price marked by the bank are not the same, this difference has provided income for the bank.
This actually means that if one hundred U.S. dollars is repeatedly exchanged in the bank, because there is a spread between the buying price and the selling price, the one hundred dollars will be exchanged less and less. The difference between buying and selling can also be understood as a bank procedure fee.
How to calculate USD to RMB?
It depends on the exchange rate, and then divide the RMB amount by the exchange rate. For example: US dollar amount = RMB amount ÷ exchange rate, for example: exchange rate = 6.5, RMB amount is 10000 yuan, can be converted: US dollar amount = 10000÷6.5=1538.46 yuan.
my country’s current exchange rate system
July 21, 2005: The Central Bank announced the abolition of the original monetary policy of pegging to a single US dollar and implementing a floating exchange rate system based on market supply and demand and with reference to a basket of currencies. On that day, the official exchange rate of the US dollar to the RMB was adjusted from 8.27 to 8.11. Since then, it has been continuously adjusted according to market conditions.
Exchange rate changes have a direct regulatory effect on a country’s import and export trade. Under certain conditions, by devaluing the domestic currency, that is, letting the exchange rate fall, it will promote exports and restrict imports; on the contrary, the foreign appreciation of the domestic currency, that is, an increase in the exchange rate, will play a role in restricting exports and increasing imports.
As long as there is a transaction, the exchange rate changes all the time. If you want to understand the conversion formula of RMB exchange rate in real time, how to calculate USD to RMB can be provided free of charge through some larger websites and trading platforms, or you can download some practical software tools with higher stability and security to automatically calculate.