Topic 8: Using money abroad and foreign exchange calculations Flashcards
What is a currency?
A currency is a unit of money used by all of the people within a country to buy and sell goods and services, to save and to borrow. It is the money that circulates among the people in that country, and it measures the value of everything that they earn and own.
What does each country have different with their currency?
Each country’s currency has a different name, symbol and value.
What is the euro?
The euro is the legal tender currency using in 17 of the 27 countries that make up the European Union.
What are pounds otherwise known as?
“sterling”
What is the currency used in the USA?
The currency in the USA, is the US dollar. The sign for a dollar is “$”.
What is the pound sterling?
The pound sterling is the official name for the British pound.
Where is the pound sterling used?
The pound sterling is the currency of the UK, Gersey, Guernsey and the Isle of Man.
What is the exchange rate?
The exchange rate is the price for buying or selling the different currencies.
What does the exchange rate between 2 currencies depend on?
The exchange rate between 2 currencies depends on how many people are buying and selling them.
What do popular currencies have?
Popular currencies have a high exchange rate so therefore not-so-popular currencies have a low exchange rate.
How do you calculate the price of buying a certain countries currency? (equation)
Amount of sterling x exchange rate = price of buying the currency
What happens if you have currency left over after your trip abroad and you want to swap it back to sterling?
If you have currency left over after your trip abroad and want to swap it back to sterling, you will take it to the bank and ask the bank to buy the currency back from you.
What is a £1 in euros?
£1 = 1.16 euros
What is a £1 in US dollars?
£1 = US$1.45
How do banks make money out of foreign exchange?
Charging a different exchange rate for buying and selling a particular currency is how the banks make money out of foreign exchange.
How can commission be charged?
Commission can be charged when you change currencies and this reduces the amount of money hat you get.
Why do you have to be careful of bureau de change kiosks abroad?
Because they usually charge high commission.
What are 3 main ways of making sure that you will have the local currency to spend when you arrive?
- buy notes and coins in that currency
- buy travellers’ cheques
- use a plastic card when you are abroad
Where can you buy most major foreign currencies?
At a bank, at a main Post Office, at some large shops or at money-exchanging offices.
What are travellers’ cheques?
Travellers’ cheques are pieces of paper that are worth specific given amounts. They are issued in your name and each cheque has an individual serial number.
What do you do with travellers’ cheques?
Once you have arrived at your destination, you can exchange them at banks or at your hotel for the local currency equivalent of the value of each cheque.
Why are travellers’ cheques safer?
Travellers’ cheques are safer because if you lose them or they are stolen, you can report the numbers of the missing cheques and they will be cancelled.
Where can you exchange money abroad?
It is best to find a bank or a foreign exchange office.
What does the French name ‘bureau de change’ mean?
The name ‘bureau de change’ is used to describe a place where you can exchange money.
