The core of all conversion services.
As you probably know, the official / reference exchange rates published by Central Banks are never found in actual trading operations. This is because the exchange rates that you see in these publications are mid-market (sometimes called the interbank or middle rate) which is reserved solely for banks and financial institutions trading in large amounts of foreign currency.
For retail or business banking customers looking to make smaller international money transfers, a margin (or spread) will be applied to the interbank rate to ensure a profit for the service making the transfer. These retail rates add commissions of 1% to 5%, or even more.
Sell or Buy?
In the real world, when you convert currency is because you are doing a commercial transaction: you are selling or buying something. At a financial level what you are doing is to sell one currency to buy another and for your financial institution it is very different when you sell a currency (the Bid, or Sell, rate) that when you buy a currency (the Ask, or Buy, rate).
Banks and financial institutions always apply the retail rates in a way to get profit. So, when you Sell your USD product to an EUR customer, you will receive middle rate – retail rate US Dollars. Oppositely, when you buy an EUR product with US Dollars you are charged middle rate + retail rate in your USD account. This is a big difference!
So if you weren’t aware of this, we hope you realize how important is to be able to accurately calculate the financial costs of your operations, specially if a significant part of your business depends on fluctuations in other currencies.
A helping hand
Adjustment factor is a new feature released in latest foxer currency calculator version 10, that specifically takes care of this mater. It is a pop-up menu from where to select the retail rate you want to apply to the conversion, being it 0% or up to 5%, or a custom value. From this menu you can also select how this factor will be applied, under a Sell or Buy schema.
Note that button’s background color changes when Sell or Buy is selected. When the factor is off, the background gets transparent.
Last but not least, you should know that the Adjustment factor is disabled for pegged currencies.
Adjustment factor looks like this:
Note that on the same menu, you can additionally adjust the number of decimals output from 0 to 6, or Auto (the default for the outgoing currency).