Currency Trading: A Traveler’s Point of View
Foreign currency exchange rates are what it costs to exchange one country’s currency for another. Someone who traveled to foreign places can better understand the mechanism involved. When the Recession hit the United States, many laid off employees went to the industrialized part of the Korean peninsula to work at English language tutors while waiting for the economic recovery in the Western Hemisphere. When an American goes to South Korea to teach, he brings with him US dollars. For his first days of job hunting, he needs to pay for his meals, hotel accommodations, sauna admission fees, travel expenses, and apartment brokers. This time he needs to sell his American dollars in exchange for Korean won because of course, he needs Korean won to go around Seoul or Pusan and not American dollars. When he goes to the bank for example, he sells $2000 and gets 2,314,814 won (at $1=1,157.407 won). Then after a week of job hunting, you were able to land a job in an English school somewhere in the outskirts of Seoul. Then you realized that you need more Korean won to buy uniform and furnish your apartment provided to you by the Hagwon (Korean tutorial school). You then sell another $2,000 dollars to the bank. You noticed that the exchange rate dropped from $1=1,157.407 won to $1=1,100 won, and thus you get only 2,200,000 won for your $2000.
Assuming that you want to spend the weekend at a friend’s place in Guam before you start your work, you have an extra 1,000,000 won with you and you want to convert it to dollars. You go to the bank and you buy dollars for 1000 won = $0.900 and thus you get $900. Of course, when we want to trade our foreign and local currencies, we check the newspapers or the internet for the price quoted. However, the selling and buying prices in the banks and currency trading shops are much different from the actual. This is because banks buy currencies at a much lower rate and sell the same for profit at a much higher rate. This is business. Forex can be complicated sometimes but understanding what traveler’s experience can be of great help.
