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Guide

FX spread, explained

FX spreadExchangeReal costTransparency

The rate you see online is not the rate you get. The difference is the spread, and it is where banks make their money. Here is how it works.

Exchange rates on a screen

What the spread is

The spread is the gap between the real commercial rate (the one banks trade at) and the rate you are actually given. If the commercial dollar is R$5.10 and your bank sells you dollars at R$5.40, that R$0.30 is the spread, about 6%, and you pay it whether you notice or not.

Why the rate you see is not the rate you get

The rate in the news or on a search result is the commercial (wholesale) rate. The rate you are offered already has the spread baked in, so the two rarely match. Because the spread is built into the quote rather than shown as a separate fee, most people never see exactly how much they paid.

Commercial dollar vs tourist dollar

In Brazil you hear two rates. The dólar comercial is the wholesale rate. The dólar turismo is the retail rate, for travel and cash, and it carries a bigger spread, commonly 3% to 6%. Cards and exchange houses quote close to the tourist rate, which is why a trip or a purchase abroad costs more than the advertised dollar suggests.

How to spot the spread

You can estimate the spread yourself:
  • Check the commercial rate (the one quoted in the news or a search).
  • Compare it to the rate your bank or provider is offering.
  • The percentage difference is the spread.
If a provider will not show the commercial rate next to its own, that opacity is usually a sign the spread is wide.

Spread plus IOF is your real cost

The spread rarely travels alone. Add IOF on top, 3.5% on a card or an outbound wire, and the real cost of a traditional dollar operation is usually 6% to 10%. The rate moving in the headlines matters less than the spread and the tax most people never see.

Spread plus IOF: the real cost

Here is how a traditional provider and Ruvo compare on the same operation:

Why banks charge a spread

To be fair, some spread is normal: moving currency has real costs, and providers take on market risk between the moment you lock a rate and the moment they settle. The problem is not that a spread exists, it is that traditional providers bury it in the quote and make it far wider than those costs justify.

How to reduce the spread you pay

You can keep more of your money by:
  • Converting close to the commercial rate, not the tourist rate.
  • Avoiding airport and hotel exchange desks, which carry the widest spreads.
  • Choosing providers that show the rate and the fee before you confirm.
  • Reducing the number of conversions you make.

How Ruvo keeps it transparent

With Ruvo you convert close to the commercial rate, not the tourist rate, and you pay a stated fee instead of a hidden spread: 0.5% to turn reais into digital dollars, with 0% IOF. You see the cost before you confirm. To understand the rate itself, see how the exchange rate works.

Spread plus IOF: the real cost

AspectRuvoTraditional bank / exchange house
Rate usedClose to the commercial rateClose to the tourist rate
SpreadA stated 0.5% fee3%–6%
IOF0%3.5% (card or wire)
Typical total cost0.5%6%–10%
You see it before confirmingYesRarely

FAQs

About the FX spread.

Talk to support

  • The gap between the real commercial rate and the rate you are actually given. It is how banks and exchange houses make money.

  • It is the retail rate, for travel and cash, with a bigger spread (commonly 3% to 6%) than the wholesale commercial rate.

  • Compare the commercial rate to the rate you are offered; the percentage difference is the spread.

  • No. The spread is a private fee set by the provider; IOF is a government tax. You usually pay both.

  • Close to the commercial rate, with a stated fee and 0% IOF, so there is no hidden spread built into your conversion.

  • You cannot remove it entirely, but converting near the commercial rate and choosing transparent providers keeps it small.

Sources

Keep reading

USD account & IOF

Rails, rates and taxes behind every dollar fee, explained.

How SWIFT works

Why international bank transfers are slow and costly.

What is ACH

The US rail that lets you receive dollars like a local.

Stablecoin vs SWIFT

Seconds and 0% IOF vs days and 3.5%.

ACH vs SWIFT

Domestic US rail vs international bank wire.

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