SWIFT & International
Foreign Exchange Rate
A foreign exchange (FX) rate is the price at which one currency can be exchanged for another. When you send an international wire transfer, the FX rate determines how much the recipient receives in their local currency. Rates fluctuate continuously based on market supply and demand, central bank policies, and macroeconomic conditions.
Banks and payment providers quote an exchange rate that typically includes a markup over the interbank (mid-market) rate. This spread is one of the largest hidden costs in cross-border payments. Each correspondent bank in the payment chain may also apply its own conversion spread if the payment passes through multiple currencies. The rate is usually locked at the moment the sending bank processes the transfer, though some providers offer forward contracts to fix rates in advance.
Even a small FX markup can significantly increase the cost of large transfers. Comparing the quoted rate against the mid-market rate reveals the true cost of a payment beyond any flat fees. Understanding FX rates helps you choose the most cost-effective channel and timing for international transfers.
Back to all terms.