Lesson 3: Currency - What is Currency Exchange?

   Constructing Knowledge

Have you ever given a small child four quarters and then tried to convince the child to trade you the four quarters for a loonie? Sometimes, children will want to keep the four quarters because they think the quarters are worth more than the loonie simply because there are more of them. They know four is more than one.

For this course, the foreign currencies that will be used are in the table below:

Foreign Currency Used in Math 10-3


United States Dollar



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European Euro



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Chinese Yuan



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Mexican Peso



Image Source: Pixabay

The value of a country's currency is based on how the world trade market perceives its value. For example, usually the Canadian dollar trades on the world money markets for slightly less than the US dollar, but the exact exchange rate changes daily, as supply and demand changes.

There is a difference between the exchange rate that foreign money is traded at in the stock exchange and the rate the bank uses to sell foreign currency to individuals.

Banks are businesses that need to make a profit. As such, bank rates are slightly higher, to cover the bank's expenses of selling other countries' currencies.

The Bank of Canada sets the financial rates for Canada. The Bank of Canada is a federal institution. It is not a bank that individual people can have bank accounts at. Below is a table that shows the Bank of Canada Exchange rates and the exchange rates of a community bank where a person could go and buy foreign currency.

Purchasing Exchange Rates for $1.00 Canadian
Foreign Currency Bank of Canada Community Bank
United States Dollar $0.94 $0.91
European Euro €0.69 €0.66
Chinese Yuan ¥5.70 ¥5.27
Mexican Peso $12.24 $11.47

Consider the first row in the table: for $1.00 CAD, you will receive $0.91 USD at your community bank. Similarly, from the last row in the table, $1.00 CAD can be exchanged for $11.47 Mexican Pesos.

Currency exchange rates change on a daily basis. To research current currency rates, use the links below.


Community Banks



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