Paying Your Tuition: What is the Currency Exchange Rate?
It’s one of the times every year when international students (scramble to) pay their university bills. If you have been studying abroad for a while, by now you might be familiar with the general process:
- get money in your home currency — ->
- check rates and realise you cannot get a good one anyway — ->
- convert currency — ->
- see that your fund arrives — ->
- pay bills.
It’s becoming mechanistic. What do we learn from this process?
It turns out that there are a lot of things that we can pick up from foreign transfer and payments, a knowledge that will benefit us now and in the future. In this post, we discuss the currency conversion rate, and what to consider when presented with an offer.
What is a currency conversion rate?
Imagine you are a student from Malaysia, and you have to pay your university $14,000.00 CAD for the semester. You decide to transfer a bit more to sustain your daily expenses.
The familiar screen on the search engine result page shows the following:
The screen presents an amount following a rate conversion. This tells you that, following this rate, 50,000MYR gets you $16,149.79.
Let’s convert this to a rate using the following standard formula:
The conversion rate is always “from this thing to something else”. You cannot have a conversion rate without knowing what it is to and from.
The conversion rate in our case is:
Expressed and calculated:
Here, 0.323 MYR:CAD is the conversion rate. It means that for every 1.00 MYR, you get 0.323 CAD.
What if we want to know, for every 1.00 CAD, how much would we get in MYR? In that case, your base currency becomes “CAD”, and target currency is “MYR”. The Conversion Rate has to be in terms of CAD:MYR.
As you can imagine, the rate is very different:
This means, for every 1.00 CAD, you get 3.096 MYR.
Yes, this, among all the worries of school! And yes, you are paying for learning, so remember to learn even as you pay.
