Mid-market rate (also known as the interbank rate or mid rate) refers to the exchange rate between two currencies that is calculated as the exact midpoint between the buy (bid) and sell (ask) prices offered by banks or financial institutions in the foreign exchange (FX) market.

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In simple terms:

• Bid price: The highest price a buyer is willing to pay for a currency.
• Ask price: The lowest price a seller is willing to accept for a currency.
• Mid-market rate: The average of the bid and ask prices.

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Formula:

Mid-market rate = (Bid Price + Ask Price) ÷ 2

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Example:
If the bid for EUR/USD is 1.1000 and the ask is 1.1005, the mid-market rate is:

(1.1000+1.1005) ÷ 2 = 1.10025

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Key Point:
The mid-market rate is often used as a benchmark for currency values and is typically what you see quoted on financial data platforms, but it’s not necessarily the rate you get when making a transaction banks and brokers usually add a markup or spread.

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