Whether you are sending money home from Dubai, paying a foreign course fee or getting paid by an overseas client, you deal with exchange rates. Yet the rate you see on Google is rarely the rate you get at the bank. This guide explains how currency exchange rates work in simple terms, and how to convert any amount with our free Currency Converter.
What an exchange rate is
An exchange rate is the price of one currency in another. If 1 US dollar equals 280 rupees, then USD/PKR = 280. To convert dollars to rupees, multiply; to convert rupees to dollars, divide.
The mid-market rate
The mid-market rate is halfway between the price at which banks buy and sell a currency in the wholesale market. It is the “fair” rate you see on financial websites and in our converter. It is a reference point, not a rate most people can trade at.
Buying rate, selling rate and the spread
Banks and exchange companies quote two prices:
| Quote | Meaning |
|---|---|
| Buying rate | What they pay you for foreign currency |
| Selling rate | What they charge you for foreign currency |
The difference is the spread, which is how they earn money. If the mid-market rate is 280, a dealer might buy dollars at 278 and sell at 282.
Why rates change every day
Exchange rates move with supply and demand. For the rupee, important drivers include:
- Imports and exports, especially oil
- Remittances from Pakistanis abroad
- Foreign exchange reserves held by the State Bank
- Interest rates and inflation
- Loans and agreements with international lenders
- Political and economic news
Interbank vs open market
In Pakistan, you will hear of two rates: the interbank rate used between banks, and the open-market rate offered by exchange companies to the public. They are usually close, but the gap can widen when dollars are in short supply.
Converting correctly
- Use the converter to see the reference rate.
- Ask your bank or exchange company for their rate and any fee.
- Compare the final amount you will receive, not just the rate.
For the most common rupee pairs there are dedicated pages, such as USD to PKR and AED to PKR. For tips on sending money, read getting the best rate on remittances.
Frequently asked questions
Why is the bank rate different from Google?
Google shows the mid-market rate; banks add a spread and sometimes a fee.
What moves the rupee’s exchange rate?
Trade balance, remittances, reserves, interest rates, inflation and economic news.
How do I convert dollars to rupees?
Multiply the dollar amount by the USD/PKR rate.
What is the spread?
The difference between a dealer’s buying and selling rates.