How is a currency conversion calculated?

Converted amount = starting amount × exchange rate. The exchange rate expresses how many units of the target currency one unit of the starting currency is worth at a given moment. Multiplying the starting amount by that rate gives the equivalent value in the target currency.

What is the inverse exchange rate?

It's 1 ÷ exchange rate — the rate you'd use to convert back from the target currency to the starting currency. Because it's a reciprocal, not a mirrored sign, the inverse rate is not simply the original rate 'flipped': a rate of 1.10 has an inverse of about 0.909, not −1.10 or 0.90.

Why is the rate I see on a converter different from what my bank charges?

Converters typically display a market or 'mid-market' rate — the midpoint between what currency traders buy and sell at. Banks, card networks and exchange services add a margin on top of that rate, or charge a separate fee, so the rate you actually receive is usually less favorable than the displayed mid-market rate.

Do exchange rates change during the day?

Yes, continuously. Currency markets trade around the clock on business days, and rates move in response to interest rates, economic data, and overall market sentiment. A rate entered into a converter is a snapshot, not a fixed or guaranteed value for any future transaction.

Does this calculator use live exchange rates?

No. This calculator uses whatever rate you enter — it doesn't fetch live market data. Use it to understand the mechanics of a conversion and the inverse rate, and get the current rate from your bank, card provider, or a live market data source before making an actual transaction.

Everyday maths guide · Reviewed 28 August 2026

An exchange rate's inverse is a reciprocal, not a mirror.

Currency conversion is one multiplication — the part worth understanding is why the rate for converting back isn't the same number with the direction reversed.

The conversion formula

Converted amount = starting amount × exchange rate. If 1 unit of currency A is worth 1.10 units of currency B, then converting 500 units of A gives 500 × 1.10 = 550 units of B. The rate itself is simply a ratio — how much of the target currency one unit of the source currency currently buys.

Why the inverse rate isn't the rate flipped in sign

To convert back from currency B to currency A, you don't use −1.10 or subtract from 1 — you use the reciprocal: 1 ÷ 1.10 ≈ 0.909. That means 550 units of B convert back to 550 × 0.909 ≈ 500 units of A, which checks out. Reciprocal math like this is why a currency that "strengthens" against another by, say, 10% doesn't mean the other currency weakens by exactly 10% in return — the two percentage moves are related but not identical, because they're computed against different bases, similar to the asymmetry in ordinary percentage change.

Why displayed rates differ from what you actually get

The rate shown on a converter or news site is usually the mid-market rate — roughly the midpoint between buy and sell prices in the wholesale currency market. Banks, card networks, and currency exchange counters add their own margin on top of that rate, or charge a flat fee, so the effective rate on an actual transaction is typically less favorable than the mid-market figure. The gap between mid-market and what you're actually offered is effectively the cost of the conversion service.

What the currency converter computes

Enter a starting amount and an exchange rate. The calculator returns the converted amount and the inverse rate, so you can see both directions of the conversion from the same input.

Convert a currency amount ↗ Calculate a percentage change ↗

Frequently asked questions

How is a currency conversion calculated?: Converted amount = starting amount × exchange rate. The exchange rate expresses how many units of the target currency one unit of the starting currency is worth at a given moment. Multiplying the starting amount by that rate gives the equivalent value in the target currency.
What is the inverse exchange rate?: It's 1 ÷ exchange rate — the rate you'd use to convert back from the target currency to the starting currency. Because it's a reciprocal, not a mirrored sign, the inverse rate is not simply the original rate 'flipped': a rate of 1.10 has an inverse of about 0.909, not −1.10 or 0.90.
Why is the rate I see on a converter different from what my bank charges?: Converters typically display a market or 'mid-market' rate — the midpoint between what currency traders buy and sell at. Banks, card networks and exchange services add a margin on top of that rate, or charge a separate fee, so the rate you actually receive is usually less favorable than the displayed mid-market rate.
Do exchange rates change during the day?: Yes, continuously. Currency markets trade around the clock on business days, and rates move in response to interest rates, economic data, and overall market sentiment. A rate entered into a converter is a snapshot, not a fixed or guaranteed value for any future transaction.
Does this calculator use live exchange rates?: No. This calculator uses whatever rate you enter — it doesn't fetch live market data. Use it to understand the mechanics of a conversion and the inverse rate, and get the current rate from your bank, card provider, or a live market data source before making an actual transaction.

Source note: This guide describes the arithmetic of a currency conversion as a general illustration. This calculator does not use live market rates. All calculations happen in your browser — nothing you enter is sent to a server or stored. This is educational information, not financial advice.