Representative Rate vs. Continuous Rate: A Complete Guide

When transferring money internationally or receiving international payments, one of the most important questions is: which exchange rate should you use? In Israel, there are two main exchange rates—the representative rate and the continuous rate. Understanding the difference between them can help you save money and make more informed decisions.

This guide explains both types of rates, how they're calculated, and why it matters for your international transfers.

What is the Representative Rate?

The representative rate is the official exchange rate set by the Bank of Israel on each trading day. This rate is published once per day and serves many purposes:

• Accounting and financial reporting

• Tax calculations

• Legal reference

• Statistical reporting

How is the Representative Rate Calculated?

The Bank of Israel determines the representative rate using the following formula:

• Sunday through Thursday: The rate is sampled between 13:15-15:15 and published at 15:30

• Fridays: The rate is sampled between 10:15-12:15 and published at 12:30

The formula takes into account exchange rate fluctuations during the sampling hours and calculates a weighted average that represents the exchange rate for the trading day.

Important note: The representative rate is not binding for transactions. It's a reference rate only, and you cannot necessarily buy or sell foreign currency at this rate.

What is the Continuous Rate?

The continuous rate is the actual exchange rate at which the dollar (or any other currency) trades against the shekel in the market at any given moment. This is the real market rate, changing constantly based on supply and demand.

The continuous rate:

• Changes every second during trading hours

• Reflects real-time market conditions in the currency market

• Is the rate at which banks, fintech companies, and currency exchange services actually trade

• Is influenced by economic events, political developments, and real-time news

The Fundamental Difference Between the Two Rates

The main difference lies in timing and usage:

Representative Rate:

• Published once per day

• Average of the continuous rate over a specific time range

• Used for reporting and reference purposes

• Doesn't necessarily reflect the real-time rate

Continuous Rate:

• Changes constantly

• Reflects real-time market conditions

• Is the rate at which transactions are actually executed

• Can differ significantly from the representative rate, especially on high-volatility days

The Bank of Israel's Role in the Currency Market

The Bank of Israel intervenes in the currency market as part of its monetary policy. These interventions aim to:

• Stabilize the exchange rate

• Prevent extreme volatility

• Support inflation targets

• Maintain economic stability

When the Bank of Israel buys or sells foreign currency in large quantities, it affects the continuous rate in the market. These interventions can create differences between the representative rate and the continuous rate.

Which Rate Affects You?

For international transfers, the rate that actually affects you is the continuous rate—the real-time rate at which the transaction is executed.

Traditional banks typically:

• Use the continuous rate as a basis

• Add a significant markup

• Don't always transparently display which rate they're using

• May use the representative rate as an excuse for high margins

How Covercy Pay Works with Exchange Rates

At Covercy Pay, we believe in complete transparency regarding exchange rates:

1. Using the Continuous Rate

We use the market's real-time continuous rate. This is the actual rate at which currencies trade at the moment of transfer execution.

2. Real-Time Updates

The exchange rate on our platform updates every 30 seconds based on live market data. You see the exact rate you'll receive before confirming your transfer.

3. No Surprises

What you see is what you get. We won't use the representative rate as an excuse to charge higher prices, and we won't add hidden fees in the form of excessive rate spreads.

Practical Example

Let's say you want to transfer $10,000 to a US account:

At 14:00:

• Market continuous rate: 3.65 ₪ per dollar

• Traditional bank: May offer a rate of 3.75 ₪ per dollar (2.7% margin)

• Covercy Pay: Transparent rate with a smaller margin, clearly displayed

At 15:30, the representative rate is published:

• Representative rate: 3.67 ₪ per dollar (average of 13:15-15:15 hours)

The continuous rate may differ from the representative rate at that time, especially if there were significant fluctuations during the day.

Tips for Saving on International Transfers

1. Compare by Continuous Rate

Always check what rate you're actually getting, not what the representative rate is. Compare the offered rate to the market continuous rate.

2. Ask About Margins

Demand transparency. Ask "What is your margin above the market rate?" instead of "What's the fee?"—because the real fee is often in the rate spread.

3. Time Your Transfers

On high-volatility days, consider waiting for a better rate. With Covercy Pay, you can track the rate in real-time and execute your transfer when the rate suits you.

4. Prefer Transparent Services

Use services that display the real-time market rate and their margin clearly, instead of services that hide the true cost.

The Bottom Line

Understanding the difference between the representative rate and the continuous rate is critical for making smart decisions about international transfers. The representative rate is an important tool for reporting and reference, but for actual transfers, the continuous rate is what determines how much you'll pay.

At Covercy Pay, we're committed to providing you with complete transparency. We use the market's continuous rate, clearly display our margin, and update rates in real-time. No surprises, no hidden fees—just fair and transparent pricing.

Next time you need to transfer money internationally, remember: it doesn't matter what the representative rate says—what matters is the rate you actually get. Demand transparency, compare prices, and choose a service that respects you with clear information and fair pricing.

Ready to experience transparent international transfers? Create a free account with Covercy Pay and see in real-time the exact exchange rate you'll receive—before you commit to a transfer.