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Foreign Exchange Seems Complicated? A Beginner's Guide to Foreign Exchange

Lifestyle15 Aug 2025
We love to travel around, so foreign exchange is nothing new to us. But sometimes, even after doing all your research online, things are different when you actually go to exchange money. Or, when you get to the bank or money changer, you're faced with so many exchange rates, ask and bid prices, and it just makes your head spin.This article will help you easily grasp the basic concepts of foreign exchange.

What is Foreign Exchange?

Simply put, currency exchange is using one currency to exchange for another. For example, converting Hong Kong Dollars to US Dollars, or US Dollars to Japanese Yen – these are all examples of currency exchange. 🌍 The foreign exchange market operates 24/5, with transactions happening globally and highly liquid major currencies, making it full of opportunities!

Price Comparison Essential! How to Interpret Exchange Rates

Many people check FX rates online before exchanging currency, but don’t assume you'll actually get that rate when you exchange money. The exchange rates you see online are usually the average of buy and sell prices. In reality, each bank and exchange shop will have different exchange rates. So, what you really need to learn to look for is each shop’s "Ask" (selling) price and "Bid" (buying) price.
  • Ask Price
The “Ask” price is the price at which a bank or exchange shop is willing to sell you foreign currency (and buy Hong Kong Dollars from you). Remember, the lower the number, the better.
  • Bid Price
If you want to sell your foreign currency and exchange it back into Hong Kong Dollars, you'll use the “Bid” price. The higher the number, the better for you.The difference between the buy and sell prices is the “spread”.

What is a “Currency Pair”?

Why can’t you just choose US Dollars or Japanese Yen directly to make a trade? Why does foreign exchange always involve buying and selling currency pairs? This is because the price of a currency is always determined by comparing it to another currency. A currency pair is the basic unit of foreign exchange trading, usually represented by a combination of two currencies, such as EUR/USD (Euro/US Dollar). The first currency represents the “base currency,” and the second represents the “quote currency.” When you buy a currency pair, you are actually buying the base currency (EUR) and simultaneously selling the quote currency (USD).Now that you know how to read prices, you need to be aware that different channels and methods will affect the exchange rate and fees.Here’s an introduction to the two most common methods of currency exchange.

Cash Exchange VS Telegraphic Transfer Rate

Cash Exchange: Going to a bank or exchange shop to instantly exchange cash, handing over money and immediately receiving the foreign currency. As banks or exchange shops have costs associated with holding cash, and they don’t keep large amounts of every currency in stock, the exchange rate is usually less favourable, and the amount you can exchange may be limited.Telegraphic Transfer Rate: Simply open a foreign currency account at a bank, find a favourable exchange rate, and exchange currency with a click of a button online. The exchange rate for this method is generally better. However, you should also be aware of any account fees, as earning a good rate but losing money on fees would be counterproductive.

Ultimate Foreign Currency Exchange Hack – Earn the Spread with One App

  • WeLab Bank Best Rate
WeLab offers a competitive exchange rate^ , this is the WeLab Bank Best Rate!! Simply successfully exchange foreign currency using the WeLab Bank App, and you can exchange for the corresponding currency at a best-in-class rate*.Learn more about foreign exchange: Exchange Currency with Ease
  • Zero Fee on Cross-Border Transfers
During the promotion period, all outbound remittance transactions successfully made through the “Cross-Border Transfer” function of the WeLab Bank App are exempt from WeLab remittance fees. The actual waived fee amount (HK$0) will be displayed directly in the WeLab Bank App when you submit the remittance transaction.Learn more about global remittance: Guide for Global Remittance
  • Daily Exchange Rates at a Glance
And every day, WeLab Bank helps you compare[PC5] [CY6] exchange rates from various banks. Getting a good rate to exchange foreign currency is easy.Learn more about daily exchange rate: Compare the best exchange rates with AI
  • Security
WeLab Bank is a licensed bank in Hong Kong, and your deposited foreign currency is protected by the Deposit Protection Scheme, with a maximum coverage of HKD 800,000 per depositor, making it safe and reliable.Learn more: Deposit Protection SchemeSo, whether you’re investing in foreign currency or traveling, earning the spread with WeLab Bank is that simple!
^Terms and conditions apply.*Please refer to Compare the best exchange rates with AI for details.Disclaimers: Currency exchange involves risks. Foreign exchange markets are subject to unpredictable fluctuations. If you choose to convert your HKD or foreign currency deposit to other currencies, such foreign exchange transactions will be subject to risk arising from exchange rates fluctuation. As a result, you may suffer losses. The information above is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter any transaction.
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