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exchange spread

Also called: buy-sell spread, bid-ask spread

The gap between the rate at which a bank sells a currency and the rate at which it buys it back; you lose it on every round trip.

A bank or exchange office quotes two rates for every currency: a higher one at which it sells to you and a lower one at which it buys from you. The difference is the exchange spread, and it is a cost paid on every round trip, even if the exchange rate itself doesn't move.

To see its size, divide the buying rate by the selling rate: 1 − buy / sell is the share lost on a same-day round trip. Spreads are wider for cash than for cards, for less common currencies and at times of stress.

The spread matters most when money is exchanged often, or when savings are moved into another currency "just in case" and later changed back to pay a bill in hryvnias. Compare it with what the other currency earns: with dollar deposits paying around 1% a year (late September 2026), a 1–2% spread can eat a year or more of interest.

Example

A bank sells dollars at 45.20 UAH and buys them back at 44.60. Dana changes 150,000 UAH into 3,318.58 USD and sells them back the same day for 148,008.67 UAH: 1,991.33 is gone, or 1 − 44.60 / 45.20 ≈ 1.33%, before the rate has moved at all.

Common mistakes

  • Looking only at the official rate. You buy and sell at the bank's rates, not at the official one.
  • Exchanging back and forth. Each round trip pays the spread again.
  • Ignoring it for a hryvnia goal. Savings changed into dollars and back to pay a hryvnia bill pay the spread twice.

Learn it in the course

  • Expense ratio: what 2% a year costs · An expense ratio, the yearly fund fee, is charged on the whole balance, every year, whatever the return. Over twenty years of 3,000 a month, 2% instead of 0.3% costs 220,130 UAH, about half of the growth.