But what does the exchange rate actually mean? Why does it change? And how can it affect the money you send?
You don’t need to be an economics expert to understand it. With a few basic concepts, you can learn how to read an exchange rate, compare your options, and get a better idea of how much money the person receiving your transfer may get.
That is why Konecta shares the current exchange rate with our community every Friday, along with the rate that will remain in effect through the weekend. The goal is simple: to help you stay informed and have this information available when planning a money transfer.
What Is an Exchange Rate?
The exchange rate is the value of one currency expressed in another currency.
For example, when we talk about U.S. dollars and Colombian pesos, the exchange rate tells us how many Colombian pesos are needed to obtain one U.S. dollar.
If an exchange rate indicates:
1 USD = 4,000 COP
it means that, as a reference, one U.S. dollar is equivalent to 4,000 Colombian pesos at that particular exchange rate.
The exchange rate is not fixed. It can change constantly as a result of different market conditions, especially the supply and demand for currencies.
In Colombia, for example, the Representative Market Exchange Rate (TRM) is a reference rate for the value of the U.S. dollar against the Colombian peso. Banco de la República explains that the TRM is calculated based on dollar purchase and sale transactions and does not represent a mandatory rate that must be used in every transaction.
Exchange Rate and Currency Rate: Are They the Same Thing?
In everyday conversations, it is common to hear both terms used almost interchangeably.
Simply put, both refer to the relationship between the value of two currencies.
For example:
1 USD = 4,000 COP
This tells us the relationship between the U.S. dollar and the Colombian peso at a specific point in time.
What can vary is the rate used for a specific transaction. A reference rate, such as the TRM, is not necessarily the exact rate applied by a particular company or money transfer service. That is why, when sending money, it is most useful to check the rate that actually applies to your transfer and how much the recipient will receive.
Why Does the Exchange Rate Change?
The value of a currency can change for many reasons, including:
- Supply and demand for dollars and other currencies.
- Economic conditions in each country.
- Interest rates.
- Inflation.
- Decisions made by central banks.
- International political and economic events.
- Investment and trade flows between countries.
You don’t need to follow all of these factors to understand your money transfer. The practical thing to know is that the exchange rate can go up or down, changing the value of one currency relative to another.
For example, if you are sending U.S. dollars from the United States to a family member who will receive Colombian pesos, a change in the exchange rate can mean that the same amount of dollars converts into more or fewer pesos.
How Does the Exchange Rate Affect the Money You Send?
This is where the exchange rate becomes especially relevant for people who send money to family members in another country.
Imagine you want to send $500 USD to Colombia.
If the applicable rate were:
1 USD = 4,000 COP
The equivalent would be:
$500 USD × 4,000 = $2,000,000 COP
Now imagine the exchange rate changes to:
1 USD = 4,100 COP
The same $500 would represent:
$500 USD × 4,100 = $2,050,000 COP
That is a difference of $50,000 Colombian pesos, before considering any additional transfer fees.
That is why, when sending money internationally, it is not enough to look only at how much the transfer costs. It is also useful to check the exchange rate and how much the recipient will actually receive.
The U.S. Consumer Financial Protection Bureau also recommends reviewing the total cost of a money transfer, the exchange rate, and the amount the recipient will receive before sending money.
Is a Higher Exchange Rate Always Better?
Not necessarily. It depends on which currency you are sending and which currency the recipient will receive.
For example, if you send U.S. dollars and the recipient receives Colombian pesos, a higher exchange rate means that each dollar converts into more pesos.
But the most useful thing is to look at the entire transaction.
Don’t look only at:
“The exchange rate is 4,100.”
Also ask:
“How much will the recipient actually receive?”
That is one of the most useful numbers to consider when comparing money transfer options.
What Is the Difference Between the TRM and the Exchange Rate Used for a Money Transfer?
This is a common question.
The TRM is a reference rate for the Colombian foreign exchange market and the U.S. dollar. It is calculated and certified based on specific foreign exchange transactions. However, this does not mean that every currency exchange or money transfer must use exactly the same rate.
In simple terms:
TRM = reference rate
Rate applied to a transaction = rate used for that specific transaction
So, if you are planning to send money, it is better to check the current rate for the service you are using rather than assuming that the TRM you find online will be exactly the rate applied to your transfer.
Why Does Konecta Share the Exchange Rate Every Friday?
At Konecta, we know that sending money is part of the regular expenses for many families. That is why every Friday we share the current exchange rate with our community, along with the information that will apply through the weekend.
The idea is simple: to make the information available so you can make better-informed decisions.
If you are planning a money transfer, checking the exchange rate can help you:
- Understand how the currency is performing before sending money.
- Estimate how much your family member may receive.
- Compare rates from different moments.
- Avoid making a decision based only on an exchange rate you saw several days ago.
- Better plan a transfer you make regularly.
Exchange rates can change, so a rate you saw on Monday may not be the same rate you see on Friday.
How Can You Make the Most of Exchange Rate Information?
You don’t need to try to predict when the dollar will reach its highest or lowest point. That is difficult even for people who closely follow financial markets.
What you can do is turn checking the exchange rate into a simple habit.
1. Check the exchange rate before sending money
If you usually send money during the weekend, checking the information shared on Friday gives you a better idea of the rate before making your transfer.
2. Look at how much your family member will actually receive
The exchange rate matters, but it is not the only factor.
You should also consider any fees associated with the transfer and look at the final amount the recipient will receive.
3. Compare your options
If you are going to use a money transfer service, review the exchange rate, fees, and final amount the recipient will receive. A transfer that appears inexpensive does not necessarily offer the best value if it uses a less favorable exchange rate.
4. If you send money regularly, pay attention to changes
If you send money every month, paying attention to the exchange rate can help you better understand how the value of your transfers changes over time.
You don’t need to become an economics expert. Simply comparing the rate from one week to another can help you understand how these changes affect your money transfers.
What Should You Check Before Sending Money Internationally?
Before sending money, consider these questions:
How much am I sending?
Determine the amount you need to send in U.S. dollars.
What exchange rate will be used?
Don’t assume it will be the same as the TRM. Check the rate that applies to your specific transaction.
How much will the recipient receive?
This is one of the most important numbers to know when evaluating the final result of your transfer.
Are there additional fees?
Review the total cost of the transfer before confirming it.
When will the money be available?
Depending on the destination country, delivery method, and other factors, the availability time may vary.
Having these details clear before sending money can help you make a more informed decision.
Send Money From New Jersey With Konecta
If you are in New Jersey and need to send money to family or friends in another country, Konecta can help you make your money transfer through our locations and authorized agents.
We work with recognized international partners and money transfer companies, including MoneyGram, Ria, Intermex, Vigo, and other providers, offering options for sending money to different destinations.
You can visit our locations in Hightstown or East Windsor, New Jersey, check the current information, and get assistance with your transaction.
And if you want to stay informed about the exchange rate Konecta shares each week, follow our Friday updates.
Frequently Asked Questions
What Is an Exchange Rate?
Es el valor de una moneda expresado en otra moneda. Por ejemplo, indica cuántos pesos colombianos equivalen a un dólar estadounidense.
Why Does the Exchange Rate Change?
La tasa puede cambiar por factores como la oferta y demanda de divisas, las condiciones económicas, las tasas de interés, la inflación y acontecimientos internacionales.
What Is the TRM?
La Tasa Representativa del Mercado (TRM) es una tasa de referencia del mercado cambiario colombiano para el dólar estadounidense. No es una tasa obligatoria para todas las operaciones de cambio.
Does the Exchange Rate Affect Money Transfers?
Sí. Cuando envías dinero entre países con monedas diferentes, la tasa utilizada para convertir el dinero determina cuánto recibirá el destinatario en la moneda local.
Does a Higher Exchange Rate Mean the Recipient Will Get More Money?
It depends on the currencies involved and the direction of the conversion. If you send U.S. dollars and the recipient receives Colombian pesos, for example, a higher USD-to-COP exchange rate means more pesos for each dollar. However, you should always consider transfer fees and the final amount the recipient will receive.
Where Can I Check Konecta's Exchange Rate?
Konecta shares information about the current exchange rate every Friday, including the rate that will apply through the weekend, to help keep our community informed. You can check our weekly updates and confirm the applicable rate before making your transfer.
Can I Send Money From New Jersey With Konecta?
Yes. Konecta offers money transfer services from its New Jersey locations and works with different partners and money transfer companies to facilitate international transfers.
Planning to send money this week? Before you do, check the current exchange rate, compare the final amount your family member will receive, and make sure you understand all the costs involved in the transaction.
