How are currencies valued and why can't people walk into a bank and buy a currency at the stock market price?

Question

For example: dollar might be valued at €1 = $1.56 but the bank will only offer you €1 = $1.52 and charge a commission on top of that for the transaction?

Answer 1

Currency is valued like everything else. Supply and Demand. The more people want something, the more it cost. there are other factors involved like one country's interest against the other. Country's monetary policy and the like. The going rate and the exchange rate are different due to markup from the bank. The same reason a bank charges $3.00 for a money order and the corner store charges $.59.

Answer 2

Thats the price large institutional investors are charging each other.  Usually the amount traded is very large, $1 million minimum.  For you to exchange $100 when traveling for example, they will have a "spread" meaning a big difference between what they will buy and sell for.  They might sell you a euro for $1.50 but only give you $1.40 for each euro you give them, then in addition to that spread they charge you a commission.  Thats how they make their money.