This article is last updated in April 2022
Interactive Brokers (IBKR) is a brokerage that allows you to trade in multiple exchanges globally, and this might require you to exchange your base currency into the currency supported by the exchange that you're trading in.
For example, if you're trading in a US exchange like the NASDAQ or NYSE, stocks listed there require you to purchase with USD in your account. But if your base currency is SGD, then you'll need to exchange SGD to USD before trading, otherwise you'll be trading on margin.
IBKR has an amazing currency conversion tool that's better than most money exchanges in terms of exchange rates. It allows you to convert currency at the spot rate, or mid-market rate.
In this article, we will show you how easy it is to convert between any two currencies.
Base currency on IBKR
Every account on IB has a base currency.
This base currency determines the currency of translation your statements, and also the commissions, research and trading fees are charged in your base currency.
You can switch between base currencies at any time by going to Settings / Account Management.
If you are not trading in a market with your base currency, you'll need to convert it.
Option 1: Using Convert Currency
Head over to Trade > Convert Currency.
On the Order Ticket, under Convert Currency, enter:
- The amount of currency to convert
- From currency
- To currency (not all currencies are supported)
Then click Submit.
If you click Preview, you can see the commission costs and how your currency balances will change after the trade.
Option 2: Converting on the IBKR app
You can also use the in-app FX conversion tool on IBKR Mobile.
This tool can also help close a currency balance directly from either the account or portfolio screen.
Under Cash Balances on the portfolio screen you can click on the desired currency and hit Convert or Close Balance (for non-base currencies).
You can then enter how much currency you’d like to exchange in the following screen. Once you’re done, just hit submit!
Note that in the above examples, currency conversions will use market order type. If you would like finer control over the rate of your currency exchanges, you'll need to use the Trader Workstation.
Fees to convert currencies with IBKR
IBKR's currency conversion fees are relatively competitive.
They start at 0.02% * trade value, with a minimum of US$2 (or USD currency equivalent) per order. Commissions for currency trades are calculated off the trade value in terms of the second currency of the pair and then converted and charged to the base currency of the account.
IBKR currency conversion tips
Since IBKR charges US$2 minimum for currency conversions, it's advisable to weigh the benefits in mid-market exchanges with IBKR against the commissions.
For smaller amounts, currency conversions might be cheaper when done using a bank or a platform like Wise.
When converting S$100 to USD:
- US$72.96 with Wise (no min. commission)
- US$72.44 with DBS Remit (no min. commission)
- US$70 with IBKR US$2 min. commission
Since banks usually charge a spread of 0.5% on the trade, the rough amount to make it more worthy to convert on IBKR is ~S$500.
Sign up for an account with Interactive Brokers using this link.