Forex Rates vs. Bank Rates: What's the Difference?
When you look up a currency rate on a platform like FinConvert, you're seeing the 'mid-market' or 'interbank' rate. However, when you go to a bank to exchange money, the rate you get is different. Understanding this difference is key to knowing the true cost of converting currency.
The mid-market rate is the 'real' exchange rate, a midpoint between the buy and sell prices of two currencies on the global market. It's the rate banks and large financial institutions use when trading with each other.
- The purest rate without any added margin.
- What you see on financial news and platforms like FinConvert.
- Not available to retail customers.
The bank rate is the mid-market rate plus a commission or 'spread'. This spread is how banks and currency exchange services make a profit. It's the difference between the price they buy a currency at and the price they sell it at.
- Includes a hidden fee (the spread).
- Always less favorable than the mid-market rate.
- The rate you actually get for your transaction.
Understanding the "Spread"
The spread is the cost of the conversion service. If the mid-market rate for USD/INR is 83, a bank might offer to buy your dollars for 82 (their buy rate) and sell you dollars for 84 (their sell rate). The 2-rupee difference is their profit margin.
This is why it's important to use the mid-market rate as a benchmark to see how fair a bank's offered rate is.
Check the Mid-Market Rate Now
Use FinConvert to see today's official mid-market rates and use it as a benchmark for your next conversion.