Middle Rate
Categories: Forex
A middle rate is the median average of the offer rate and the bid rate in a foreign exchange transaction (meaning trading currencies, not stocks or the like). Each party agrees to split the spread.
It’s like a compromise, where buyer and seller can meet in the middle. Since the middle rate is for forex transactions, the ask and bid prices probably are not too far off...more likely in the range of cents than dollars. However, if the volume of the trade is large, obviously those cents can add up.
If a buyer bids for Shmoop doops at a price of $5.8934 and a seller of Shmoop doops for USD asks for $5.9321, the agreed upon trade for the middle rate is the average: $5.91275.