jeffjaguar: I believe BA does not immediately translate the amount to GBP.

I just reran the 679 Avios redemption YQ I just I listed. Today BA.com lists HK$673.00 for Avios redemption and CX.com lists HK$723.00

HKD 380.00 - CX Fuel / Insurance Surcharges YRVA
HKD 120.00 - Hong Kong SAR - Air Passenger Departure Tax HKAE
HKD 173.00 - Thailand - Passenger Service Charge TSLA
HKD 50.00 - Hong Kong Security Service Charge HKS

The difference between BA and CX is the HK$50 HKS. For reasons unknown to me (but I'm very grateful) BA does not pass that on.

The HKD173 moved - it was HKD179 when I ticketed. This is obviously denominated in THB.

The other charges are denominated in HKD.

Given BA.com charges exactly the same as CX.com for the charges, my hypothesis is - BA does not convert the charges to GBP but keeps the amounts in HKD and hands them over to CX and HK Airport Authority.

If there's a conversion to GBP, I believe we should see a slight difference in amount charged e.g. the the YRVA will be 380.01 or 379.99 not exactly 380.00.

It's only a hypothesis but I hope it is seen as a reasoned one.

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Does BA save? I think it does.
It is relieved from the administrative cost of setting up merchant accounts in every jurisdiction it operates, and bank charges for remitting proceeds back to head office.

But it still achieves compliance with the requirement of billing each passenger in the currency of the starting point of travel.

In lieu of BA paying remittance costs, the passenger is charged 1% (or 0.8%?) for sending payment to BA UK. Or the bank absorbs the card association cost (MC). Or the card association bears the cost (Visa).

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Tying this back to DCC, the DCC merchant asserts cardholders save on foreign currency conversion fees.

This is true if the card used has no FTF. Even if so, an international fund transfer has occured, so the DCC merchant has merely exploiting the card association's absorption of fees to settle between member acquirers internationally or the issuer's absorption of the card association's fees.

Having arranged for a fee-free transfer of funds to the DCC operator, the DCC operator still has to convert the proceeds. The conversion rape (sorry, rate) is a constant rip-off - for HK, the exchange rate rort consistently exceeds any FCC savings we might earn.