[ELI5] Why is the exchange rate between two currencies not the same going both ways? Like why is the exchange rate of USD to GBP different from GBP to USD
In: Economics
If the exchange rate is the same the US to GBP rate will be 1/(GBP to USD) rate. The rate in both directions is only identical if the value of the currency is identical in valure with a exchange rate of 1.
If there is 2 GBP for 1 USD then the GPB-> USD rate is 2.0 and the USD-> GBP rate is 0.5
If you that inverse relationship was included it is the case that the rate include what the exchanger takes for them selfe to run the company. So they take away a percentage as a fee to run the operation and to make profit.
You could have written it an exchange rate of X with a fee of 1% but that is harder for a consumer.
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