What Is an Exchange Rate?
Exchange rate definition — what it represents, how it's quoted, and the difference between mid-market and the rate your bank gives you.
Reviewed Jan 15, 2025
Quick answer
An exchange rate is the price of one currency expressed in another. The mid-market rate is the midpoint between buy and sell prices — banks add a margin on top before they trade with you.
How rates are quoted
Rates are quoted as a pair, like USD/EUR = 0.92, meaning one US dollar buys 0.92 euros. The first currency is the base; the second is the quote.
Mid-market vs your bank's rate
Mid-market is the underlying reference rate used between banks. Your bank or card adds a spread on top to make money on the conversion. The difference can be a fraction of a percent or several percent.