After having learned about the time zones of the world in an earlier lesson, you may be more interested in travelling.

One of the challenges of travelling outside of Canada is understanding just how much your money is worth in a different currency. Are you getting a deal on that shirt you want to buy or are you paying twice as much as you would in Canada?

In this lesson, you will learn why people exchange money and how to convert from Canadian dollars to foreign currency and from foreign currency back to Canadian dollars.

Think about This:

The most important reason to change into the currency of the country you are going to is the fact that it is a lot easier to use the local currency when you are purchasing something.

It also keeps you from being taken advantage of. When you change your money in Canada before you leave (or withdraw cash from your bank at an ATM machine when you arrive in the new country), you will pay a fee for doing so, unless you have a bank account that allows you to do this for a set fee. The fee is usually fair. If you are a member of the Alberta Motor Association, you can exchange money without a fee. They will exchange Canadian dollars into US dollars, Euros, British Pounds, or Australian dollars. This can change in some other foreign countries. They may charge you large amounts to exchange your Canadian currency into foreign currency.

The exchange rate changes almost every day. For example, look at the graph below.

The graph below shows the exchange rates between the Canadian Dollar (CAD) and the US Dollar (USD) between 12/28/15 and 1/27/16.

Courtesy of Getty 
 
 

As you can see, the Canadian dollar goes from a high of $0.71 per US  dollar to a low of $0.68 per US dollar from December 28, 2015 to January 18, 2016. Historically, as of January 27, 2016, the Canadian dollar was the highest at $1.10 US on November 7, 2007 and reached it's lowest point at $0.62 US on January 21, 2002.

If you are planning a trip, it is important to watch the exchange trends, because it just might be worth it to exchange your money earlier than you had planned if the rates are in your favour. You will learn how to calculate how much money you will receive when you practise calculating exchanges in Activity 2.