An exchange rate is the price of one currency expressed in another. Anyone who travels, sends money abroad or follows the prices of imported goods meets it sooner or later. On any given day, though, you will see not one rate but several, and it helps to know which is which.

The official rate

The official rate is set by a country’s central bank. In Uzbekistan that is the Central Bank, which publishes the official rates of the soum against foreign currencies on its website, cbu.uz. The bar at the top of this site shows the official rate as well.

This rate is a reference point rather than an offer to customers. It is used in accounting and statistics and for working out customs and other mandatory payments. You should not expect a bank to exchange your money at exactly this rate.

Buy and sell rates at banks

Banks and exchange offices set their own rates, and they quote two of them. The buy rate is the price at which the bank buys foreign currency from you. The sell rate is the price at which it sells that currency to you, and it is the higher of the two.

The gap between the two is called the spread. It covers the bank’s costs and brings it income, much as a shop sells goods for more than it paid for them. Each bank sets its rates by its own needs and by supply and demand, so the figures differ between banks and from the official rate.

Rates may also differ within one bank. The rate for cash at a counter is not always the same as the rate in a mobile app or for a card payment. Some services carry a separate commission, which changes the amount you actually receive.

How to compare offers

First decide which side of the deal you are on. If you are buying foreign currency, look at the bank’s sell rate; if you are selling it, look at the buy rate. The two are easy to mix up.

Then compare several banks on the same day, for the same currency and the same way of exchanging. Ask whether a commission applies and work out the final sum you will end up with. A slightly better rate can be cancelled out by a fee.

Exchange money only at banks and official exchange offices, and keep the receipt. Rates change, so check them again shortly before you go. The official rate tells you roughly where the market stands, and the banks’ own rates tell you what the exchange will actually cost.