Currencies & Exchange Rates

Every country has its own money

• In Hong Kong, money is the Hong Kong dollar (HK$)
• In the USA, it’s the US dollar (US$)
• In Japan, it’s the yen (¥)
• In China, it’s the yuan or renminbi (¥ or CN¥)
• In Europe, most countries share the euro (€)
• In the UK, it’s the pound (£)
• In Korea, it’s the won (₩)

When you travel or shop online from a foreign website, you need to convert from one money to another. That’s done at an exchange rate.

What’s an exchange rate?

An exchange rate tells you how much of one money equals one unit of another.

Example: 1 USD = HK$7.80

If you have US$1, you can trade it for HK$7.80. If you have HK$7.80, you can trade it for US$1. (Minus a small fee from the bank — more on that in a moment.)

Japanese yen are interesting because one yen is a tiny amount.

1 yen ≈ HK$0.052 ← that’s about 5 cents!

So HK$100 ≈ ¥1,923. A lot of yen for not-a-lot of HK dollars.

Try it

Type an amount of HK dollars. Watch what it’s worth in other currencies.

Things to notice:

• HK$1,000 is a lot of yen (over ¥19,000) but not even £110.
• Korean won amounts are huge — prices in Korea look scary at first but are often similar to Hong Kong prices.
• The USD peg (HK$7.80 = US$1) means USD amounts are very easy to estimate: divide HK by 8.

Why do rates move?

Most currency pairs change every second of every day. A rate moves because:

1. Supply and demand. If more people want US dollars than HK dollars, the US dollar gets “stronger” — takes more HK$ to buy 1 USD.
2. Interest rates. If the US pays 5% and HK pays 2%, more people want to hold US$. USD strengthens.
3. Economy strength. A country doing well attracts investors.
4. News and crises. Wars, elections, pandemics all shake currencies.

The HK dollar is a bit different: because it’s pegged to the US dollar at ~7.80, the HK government buys or sells to keep it inside a tiny band. So it barely moves vs USD, but it moves a lot vs yen and euro — because the USD moves.

Bank fees and spreads

When you actually exchange money — at a bank, the airport, or an app — you pay a fee. The rate on Google might say 1 USD = 7.80 HK$, but the money changer will say:

• They’ll buy your USD for HK$7.70
• They’ll sell you USD for HK$7.90

The 20-cent gap is called the spread, and it’s how they make money.

• Airports have the worst rates — avoid!
• Credit cards usually give near-real rates but add a 1-3% foreign fee.
• Apps like Wise or Revolut often give the best rates.

Big vs small numbers: don’t be fooled

A common confusion: a country with a “small” currency isn’t poor, and a country with a “big” number currency isn’t rich.

Japanese prices look huge — a coffee might cost ¥500. But that’s under US$4, totally normal.

British prices look tiny — a coffee might cost £3. But £3 ≈ US$3.80, also normal.

The rate matters, not the size of the number.

Practice