Beat The Money Changer’s Game

Do you get confused by the money changer when they use SGD per 1 USD or USD per 1 SGD? What about which rate to take when you buy or sell currency? How many times have you simply accepted the board rate?

If you’re struggling with these questions, read on.

Let’s start with the basic – the currency pair.


If you do a search online, this is how most currency pairs are displayed on exchanges, trading platforms and even google.

We call this the indirect quote.

Unsurprisingly, the opposite of this is the direct quote. Let’s have a look at their difference.

Notice how the exchange rate seems different but are actually the same thing? With a little arithmetic, you can convert direct to indirect quote and vice versa. Here’s how:

Direct quote = 1 / Indirect quote
Eg. SGD/USD = 1 / 1.341 = 0.746


Indirect quote = 1 / Direct quote
Eg. USD/SGD = 1 / 0.746 = 1.341

Not that hard eh? The key is to always convert to the type of quote you’re most comfortable with.

Sometimes money changers confuse you further by using a larger unit of the quote or base currency like 134.1 SGD per 100 USD. Our advice, reduce it to a single unit first before proceeding with the conversion.

We buy or we sell, I buy or I sell?

Money changers will always have two rates that are shown for a particular currency pair. They can be “buy & sell”, “we buy & we sell”, etc, but you get the point.

These rates are generally from the perspective of the money changer.

Using the AUD example above taken from Mustafa’s website:

We Buy: You, the customer want to get rid of the AUD you’re holding, for local currency. You sell this AUD to the money changer who buys it at 1.0840 SGD per 1 AUD.

We Sell: You need to buy AUD because you’re headed for a holiday, and the money changer sells it to you at 1.1000 SGD per 1 AUD.

Let’s put this into perspective for you. First, thing to establish is that this Mustafa example is an indirect quote. So when you’re buying foreign currency, look at the bigger number. The opposite is true when you’re selling foreign currency – look at the smaller number.

For the purpose of understanding the differences, now lets invert the buy/sell AUD rates to that of a direct quote. You should arrive at Buy = 1/1.084 = 0.923 and Sell = 1/1.1 = 0.909 respectively.

Notice how the rules of the game has changed now? The buy value has suddenly become larger than the sell value.

We Buy: You, the customer want to get rid of the AUD you’re holding, for local currency. You sell this AUD to the money changer who buys it at 0.923 AUD per 1 SGD.

We Sell: You need to buy AUD because you’re headed for a holiday, and the money changer sells it to you at 0.909 AUD per 1 SGD.

In other words, use the smaller number when you’re buying foreign currency, and bigger number when you’re selling them.

Now do you understand why we stress the importance of converting to the type of quote you’re comfortable with? It really helps to avoid all these confusions.

The crux of the money changing business is about charging more and paying less – which is why these two rates exists – It’s called a buy/sell spread.

The lower the buy rate and higher the sell rate, the more money the money changer is making off you.


Naturally, you should never take the board rates at face value because they may very well be unfavourable.

Always, always, always check online for the prevailing spot exchange to get an indication of how much premium the money changer is charging.


The laws of supply and demand are applicable.

Dominant currencies like US, Euro and Aussie dollar, where there’s constant supply will be cheaper.

Currencies in less developed nations, especially those outside our region will charge high premiums. So if you’re going somewhere like eastern Europe, it’s better off to do the exchange at the specific country itself; and of course, with Euros.


The amount of currency transacted will have an effect on the rate that money changers are willing to deal with you. Most money changers have preferential rates for customers who are looking to transact in large volume.

Board rates generally show what they’re prepared to pay for small amounts, so it’s always good practice to ask at the counter. State the amount of currency you’re looking to buy or sell and ask them to quote.

Remember: Volume is a bargaining chip


Some money changers charge a fee for the service rendered. This is not something common in Singapore, but they do exist.

When overseas, always ask for their fee structures. Sometimes this may not be evident only after you’ve decided to make the exchange.

Shopping Around

It’s unlikely that any of you would settle for the first money changer you see. And that’s good habit anywhere you go.

The rule of thumb here is that the more accessible the place is to tourists, the lousier the rate.

When overseas, it pays to do a little homework online and visit a few money exchange to get a feel of the rates and fee structure of the area.


Exchanging currency shouldn’t be a nervous nor complicated affair. With a little more effort, questions and common sense, one can avoid a bitter taste just prior to what would’ve been a relaxing holiday.

This post is brought to you by Retire Your Banker


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