Buy vs Sell Rate: What You Need to Know

Understanding Buy and Sell Rates

One of the most common sources of confusion when exchanging currency is understanding buy and sell rates. This guide explains it simply.

The Basic Concept

Think of it from the bank's perspective:

• Buy Rate: The rate at which the bank BUYS foreign currency FROM you
• Sell Rate: The rate at which the bank SELLS foreign currency TO you

A Practical Example

Let's say you're at an Egyptian bank and the USD rates are:

• Buy Rate: 49.50 EGP
• Sell Rate: 50.00 EGP

If you're selling dollars (converting USD to EGP):

You'll receive 49.50 EGP for each dollar you sell.

If you're buying dollars (converting EGP to USD):

You'll pay 50.00 EGP for each dollar you buy.

The Spread: The Bank's Profit

The difference between buy and sell rates is called the "spread" - this is how banks make money on currency exchange.

In our example: 50.00 - 49.50 = 0.50 EGP spread

Spread as percentage: 0.50 / 49.75 (midpoint) × 100 = ~1%

Why Spreads Vary

Spreads differ based on:

Factor

Effect on Spread

Currency Liquidity	Major currencies (USD, EUR) have tighter spreads
Market Volatility	Higher volatility = wider spreads

Competition	More banks = tighter spreads
Transaction Size	Large amounts may get better spreads

Customer Type

Premium customers may get preferential rates

How to Minimize Spread Impact

Compare banks - Spreads vary significantly between institutions

Exchange larger amounts - Ask for better rates on big transactions

Choose the right bank - Some banks specialize in certain currencies

Time your exchange - Spreads may widen during volatile periods

Common Mistakes to Avoid

Mistake 1: Assuming the "best" rate applies to both buying and selling

• Always check both rates

Mistake 2: Ignoring the spread

• A bank with a good buy rate might have a poor sell rate

Mistake 3: Not negotiating

• For large amounts, many banks will negotiate

Summary

You Want To...

Bank Rate to Check

You'll Receive/Pay

Sell USD, get EGP	Buy Rate	EGP at buy rate × USD
Buy USD, pay EGP	Sell Rate	EGP at sell rate × USD

Understanding these basics helps you make smarter currency exchange decisions. Use 3omlla to compare both buy and sell rates across all Egyptian banks.