How to Read an Exchange Rate Quote Without the Confusion

Exchange rate quotes are written in a shorthand that is efficient once you know it and confusing until you do. This guide walks through the parts of a quote and the questions worth asking before you agree to one.

Base and quote currencies

A rate written as USD/NGN tells you how many naira (the quote currency) one US dollar (the base currency) is worth. The base currency is always one unit.

To keep the arithmetic simple, the examples below use a hypothetical rate of ₦1,000 per dollar. It is chosen for easy maths and is not a real or current rate.

• At ₦1,000 per dollar, USD 100 is ₦100,000 (multiply by the rate).

• At the same rate, ₦250,000 is USD 250 (divide by the rate).

Buy and sell: whose point of view?

When a bureau de change shows a buy rate and a sell rate, both are from the dealer's point of view:

• Buy rate: what the dealer pays you when you sell them foreign currency.

• Sell rate: what the dealer charges you when you buy foreign currency from them.

The sell rate is normally higher than the buy rate. If you are buying dollars, look at the sell rate; if you are selling dollars, look at the buy rate.

Questions to ask before you agree

1. Is this rate for buying or for selling, and for which currency?

2. What is the total in naira for my exact amount?

3. Are there any charges on top of the rate?

4. How long is this quote valid for?

5. What will I need to provide to complete the exchange?

If the total in naira is clear and agreed in advance, the rest of the quote is just detail.

Reference rates are a guide, not a quote

Published reference rates, like those on our home page, are useful for checking that a quote is in a sensible range. They are not an offer to trade. For the applicable Sofex rate, contact us and we will confirm it with you directly.