In our last blog post, we explored different currencies around the world and why they have different values. But how do you know how much money you'll get when exchanging currencies? Let’s find out!
What is an Exchange Rate?
An exchange rate tells you how much one currency is worth compared to another.
For example:🔹 £1 = $1.25 (This means 1 British Pound is worth 1.25 US Dollars.)
🔹 €1 = £0.85 (This means 1 Euro is worth 85p in British Pounds.)
Exchange rates change constantly because of how strong a country’s economy is and how much people want that currency.
How to Calculate Currency Exchange
Example 1: Converting Pounds to Dollars (£ → $)
Imagine you are going on holiday to the USA and want to exchange £50 into US dollars. If the exchange rate is:
🔹 £1 = $1.25
To find out how many dollars you’ll get, multiply your money by the exchange rate:
£50 × 1.25 = $62.50
So, £50 will give you $62.50!
Example 2: Converting Dollars to Pounds ($ → £)
Now, let’s say you come back from your holiday with $40, and you want to change it back into pounds. If the exchange rate is:
🔹 $1 = £0.80
To find out how many pounds you’ll get, multiply your dollars by the exchange rate:
$40 × 0.80 = £32
So, $40 will give you £32!
Quick Trick to Remember!
⭐ If you're changing from pounds to another currency, → Multiply by the exchange rate.
⭐ If you're changing from another currency back to pounds, → Multiply by the exchange rate.
💡 Extra Challenge: If the exchange rate for £1 to Euros is 1.10, how much would you get for £30? Try it and let us know in the comments!
Want to learn more about money? Join Smartmonies School today! Use code SMARTSAVER for £10 off your lesson
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