It's been a while since I've traveled outside of Texas, but when I was stationed in Italy, getting a good rate of exchange meant the rent would be cheaper. Heating fuel would be cheaper. We might be able to afford to get the house up to 20 °C when we needed it.
I found our on-base bank would give only 600 lira to the dollar. A place in town that wanted American money would give me 1,000 lire to the dollar if I could get them $1,000 at a time. Naturally, I got all my friends together and made sure I got that rate every month. The 3,000-lira dinner that cost me $5 in the beginning was now costing me $3. I was getting a 40% discount on everything I bought with Lira!
It was a great deal for me but not for the businesses I dealt with.
In today's worldwide market, we as product retailers need to ensure we are being properly compensated for our product.
The first problem is the fluctuating valuations of other currencies to our shop's base currency.
Figuring out a way to make sure we are properly compensated for our product is where many store owners make the next, and biggest mistake.
The currency and all its rates, sources, and conversion ratios have nothing to do with what exchange rate you are giving the customer. If you think of it that way, you are going to be going around in circles for months trying to figure it out,
The rate shown on your currencies page should have at least one currency, but most have two, and several have as many as six to seven currencies.
DO NOT think of these rates as exchange rates. You will never get them to match up, and you will drive yourself crazy trying.
If you are using the USD as your default and also have GBP as a currency, let's say today's EXCHANGE rate is .82 GBP for 1 USD. If you sell a $10 USD product in the UK for 8.2 GBP, one would think you were going to break even. Not so.
When the payment is processed tomorrow, the exchange rate may have changed a little or dramatically.
That's where the Conversion Ratio in Configuration >> My Store comes into play. If I set the ratio to 1.05 to one, that DOES NOT mean I'm giving the UK a better deal. It means that instead of 8.2 GBP for that $10 USD item, they will now need to pay 8.61 GBP for the item. I am guaranteed to get enough at transaction time to cover most daily changes to the rate.
And, with the ratio set to 1.05:1, I can run a daily cron job that makes sure everything is current. If tomorrow's GBP jumps to .85, the ratio will make that day's price for the item become 8.93 GBP.
You can rest easy knowing the cron will update you daily and most daily adjustments will be easily handled while you take care of other pressing matters.
