Banking organizations provide their customers with a number of services, of which one of the main places is reserved for operations with different currencies. So, in banks in the Russian Federation, you can exchange Russian rubles for other monetary units. In addition, other operations using various currencies are available. As an example of the service provided by most commercial banks in the Russian Federation, we can name the conversion of various currencies. What is currency conversion?
Foreign currency conversion
Financial institutions in the Russian Federation are actively involved in domestic and international currency markets. This gives them the opportunity to offer their customers services for the implementation of operations related to banknotes. Currency conversion, which is a procedure for exchanging one foreign currency unit for another, also belongs to this category of services.
The easiest way to explain what currency conversion is is with a good example. Suppose a client of a commercial bank has a certain amount in US dollars on hand. It must be exchanged for British pounds. In order not to sell dollars for Russian rubles with the subsequent acquisition of British pounds, a bank client can immediately exchange US dollars for English currency. This is the conversion of currencies.
The formation of the exchange rate in commercial banks
What is currency conversion in Russia? The Central Bank of the Russian Federation does not regulate the procedure for determining the quotations of one foreign banknote relative to another currency. Therefore, commercial banks to carry out such transactions establishes its internal rate, which is called the conversion rate. The current market rate is used as a guideline for setting this value. As a rule, its value approaches the quotes of currency pairs on the interbank exchange. Thus, for example, a conversion rate is set for currency transactions at Petrocommerce Bank.
In addition, many banks introduce the so-called cross rate to carry out such transactions. With this method, the exchange rate of a foreign currency relative to another is set through a third currency. It will be worth mentioning that some financial organizations use the Russian ruble in this capacity, while others use the US dollar.
Currency Conversion for Individuals
In almost any commercial bank, individuals have the opportunity to convert such major foreign currencies as the US dollar and the euro. Some banking organizations generally work only with this currency pair. Therefore, if necessary, to carry out the conversion with other monetary units, it will take some time to find a suitable bank.
It should be emphasized that selecting the best conversion rate for the dollar or euro is not an easy task. This is due to the ability of various banking organizations to set their own quotes. Moreover, such a process can be based on data on exchange rates from the interbank exchange or on the current rate of the Russian ruble. It should also be borne in mind that quotes for one day may periodically change. What is conversion, sorted out. And what facts affect courses and quotes?
