Money Exchange Rate- business?

2 Answers

1. 
   

   
   

   cainvest1 on Jan 17, 2012

   They make their money on the spread between what they buy and sell just like any other business, except the inventory is money. In addition to the spread on FX transactions, they make interest on float from uncashed travelers checks, gift cards.

   Think of their currency on hand as inventory just like a store that has goods on a shelf. They make a mark-up on every buy and sell they make. If they have excess they sell it wholesale to another major international bank. If they have a shortage they buy wholesale from a bank.

   Additional Information:

   You are checking with the wrong source. Branches are not were FX is traded. It is NY, LA, London, Hong Kong, etc. on the FX Desk. Trillions of dollars flow through FX settlements per day. Most are interbank transactions in the settlement of wholesale business transactions are are not related to the retail market you are looking at.

2. 
   

   
   

   JoeyV on Jan 17, 2012

   I think you need to do a little research on FX markets. The silly little retail online FX market is inconsequential in the greater scheme of things. Vastly more money is exchanged in Interbank forwards and swaps. Many of these are deliverable and delivered. Banks like Citi and BAC are big players in these markets. You can exchange currencies with them in billion dollar quantities if you want.

   You can certainly buy currencies from those banks at Interbank rates (which would be "wholesale", I guess).