If I google the exchange rate from one currency to another, it shows a much better rate than what I would get in a bureau de change for the same amount of money. Why are these two rates so different?
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The official rate is the rate when buying/selling millions of dollars of currency on the foreign exchange (ForEx), where currency trades like stock. But that’s not the real world rate for small quantities that a tourist would exchange.
The retail money exchange places need to make money to operate the business! By adjusting the exchange rate slightly from the true rate, they make revenue from that spread. Say an exchange rate is 1.5:1, they might only give 1.4:1 for selling the currency and 1.6:1 when buying back, making 0.1 on each unit exchanged. And that’s the business’ money to pay rent, pay employees, etc.
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