I spotted an interesting thread which I then followed up on today at the Search Engine Roundtable which shows that Google won't reveal the source of the exchange rate they use. So if you are an international AdWords customer and you pay in your local currency, and you want to know why the exchange rate is so poor, you are out of luck. The AdWords representative states: "the product managers are not willing to discuss the former at this time as part of protecting the whole." And Threadwatch notes Google also claims it can't give this information out for "competitive reasons."
The AdWords representative does offer a solution that may be viable for some advertisers but not many:
Open a second account in your local currency. Replicate an Ad Group from your existing account in the new account, and pause it in the USD account. Once a billing cycle or two hits, you should have a good idea whether the currency exchange will be in your favor and if your bank really is charging your an exorbitant rate.
Well, why isn't this good for everyone? Because this will delete any history you have with those campaigns. Any quality score you earned will be lost and you will have to start from scratch.
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