Interbank exchange rates refer to the exchange rates at which banks buy and sell currencies from each other. These rates are important because they affect the value of currencies for businesses and individuals who need to exchange money across different countries. In this blog, we’ll explore what is IBR Rate, how they’re determined, where to find authentic & real-time exchange rates and why they matter.
What are interbank exchange rates?
Interbank exchange rates are the exchange rates at which banks buy and sell currencies from each other. Interbank exchange rates are also commonly referred to as spot rates. The spot rate is the exchange rate at which a currency can be bought or sold for delivery within two business days. These rates are typically used as a benchmark for exchange rates in the wider market, as they reflect the rates at which banks with significant trading volumes can exchange currencies with each other.
The interbank rate is used by banks to settle transactions between themselves, such as when one bank needs to pay another bank in a different currency. These rates are typically quoted with a bid-ask spread, which represents the difference between the price at which banks are willing to buy and sell currencies. The bid price is the price at which a bank is willing to buy a currency, while the asking price is the price at which it’s willing to sell the currency.
How are interbank exchange rates determined?
Interbank exchange rates are determined by supply and demand in the foreign exchange market. Banks with excess currencies will offer them for sale, while banks that need those currencies will buy them. The exchange rate at which these transactions occur is determined by the market, based on the supply and demand for each currency.
Many factors can affect the supply and demand for currencies in the foreign exchange market. These include factors such as economic data, central bank policies, political events, and natural disasters, among others. Changes in any of these factors can cause fluctuations in exchange rates.
Where you can find authentic & real-time interbank exchange rates?
Although many sources are available online to find interbank exchange rates, not all are authentic and real-time. The best platform that displays accurate & live interbank exchange rates is https://ibrlive.com. You can find IBR rates of almost all currencies on this website, which is free of charge.
Why do interbank exchange rates matter?
Interbank exchange rates are important because they affect the value of currencies for businesses and individuals who need to exchange money across different countries. For example, if you’re a business that needs to pay a supplier in another country, you’ll need to exchange your local currency for the currency of the country where your supplier is located. The exchange rate you receive will determine how much of your local currency you need to exchange to pay your supplier.
In addition, IBR rates can affect the profitability of businesses that operate in multiple countries. If a company earns revenue in one currency but has expenses in another currency, changes in the exchange rate can affect its profit margin.
Finally, IBR rates can also have an impact on the wider economy. For example, strengthening a country’s currency can make its exports more expensive and less competitive in foreign markets. This can lead to a reduction in exports and a negative impact on the country’s economy.
In conclusion, interbank exchange rates are an important component of the foreign exchange market. They are used by banks to settle transactions between themselves and serve as a benchmark for exchange rates in the wider market. Understanding how these rates are determined and why they matter can help businesses and individuals make better decisions when it comes to exchanging currencies.
A forex card exchange rate is like a display board where a bank publishes exchange rates for buying and selling foreign currencies, travel cards, and currency notes. The spread between buying and selling currencies in a card rate is generally kept very wide. For example, SBI forex card rates for USD/INR can be in the form of the below-mentioned table:
Currency
Bank Buying Rate
Bank Selling Rate
TT Buying rate
Bills Buying rate
Currency notes
Travel card
Traveller’s cheques
TT Selling rate
Bills Selling rate
Currency notes
Travel card
Traveller’s cheques
Demand draft
United States Dollar (USD)
80.94
80.94
79.45
80.69
80.69
84.58
84.58
85.94
84.36
84.36
84.24
When a bank displays a card rate for foreign exchange, it may show both the TT buy rate and the TT sell rate. The TT buy rate is the rate at which the bank will buy foreign currency from the customer in exchange for local currency. The TT sell rate is the rate at which the bank will sell foreign currency to the customer in exchange for local currency. The difference between the TT buy and TT sell rates is known as the bid-ask spread, and it represents the bank’s profit margin for facilitating the transaction. The bid-ask spread can vary depending on various factors, such as market conditions, currency volatility, and the size of the transaction. Customers need to understand the card rate and the bid-ask spread to make informed decisions about foreign exchange transactions and to minimize the costs associated with such transactions.
Do the forex card rates of each bank differ?
The card rate can differ across banks. Each bank sets its own card rate based on a variety of factors, such as its cost of acquiring foreign currency, operating expenses, and profit margin.
The differences in card rates across banks can impact the cost of foreign exchange transactions for customers. Therefore, comparing the card rates offered by different banks before making a foreign exchange transaction is essential to get the best possible rate.
What is the difference between the card rate & interbank exchange rate?
The card and interbank exchange rates are two different rates used in foreign exchange transactions. The main differences between the two are:
Definition: The interbank exchange rate is the rate at which banks buy and sell currencies with each other in the wholesale market. It is used by banks to settle their transactions and by other financial institutions as a benchmark for pricing their foreign exchange products.
On the other hand, the foreign exchange card rate, refers to the rate derived on a daily basis by bank based on the interbank exchange rates by keeping a substantial margin on buy and sell foreign exchange transactions. Generally the margin loaded in forex card rate is more than 1 rupee on USD/INR transactions, 2 rupee on EUR/INR transactions and 3 Rupee on GBP/INR transactions. This margin can vary across banks based on their different strategies and other market factors.
Calculation: Numerous economic considerations and market dynamics of supply and demand as well as market dynamics of supply and demand, influence the interbank exchange rate. While the bank’s profit margin, the interbank rate, and any other fees or charges are all included in the card rate, which is established by the bank.
Spread: The difference between a currency pair’s purchasing and selling rates for a currency pair is known as the bid-ask spread. Due to banks’ high volume of transactions, the spread for interbank exchange rates is normally quite small, with only a few pips. For example the spread between USD to INR IBR rate is generally 1 to 3 paisa only. As a result of the bank’s profit margins and other expenses related to supplying retail consumers with foreign exchange services, the gap in card rates is often greater and can range between 1 to 3 Rupees.
The government had received requests from Export Promotion Councils and leading exporters that they should continue with the current Foreign Trade Policy (2015-20), which had been extended from time to time.
The government has always involved all stakeholders in formulating policy. Hence, it was decided to extend the Foreign Trade Policy 2015-20, valid till Sept 30, 2022, for a further period of six months, till 31.03.2023.
On March 31, 2023, Shri Piyush Goyal, the Hon. Minister of Trade and Industry, revealed his proposed foreign policy for the years 2023 to 2028.
The policy is in place as of April 1, 2023, and it remains in place through March 31, 2028.
The new global trade policy’s goal, unveiled in March 2023, is to grow India’s exports to $2 trillion by 2030. Its flexible and open-ended nature allows it to adapt to changing needs.
The policy is built around four pillars: Developing Areas, Export Growth through Collaboration, Incentive to Remission, and Ease of Doing Business.
A one-time amnesty program is introduced in the FTP 2023 to allow exporters to finish up any old outstanding authorizations and start over.
The “Towns of Export Excellence Scheme” and the “Status Holder Scheme,” promotes the recognition of new towns and exporters, respectively.
The policy emphasizes process re-engineering and automation to make doing business easier for exporters and growing sectors, including dual-use high-end technological products under e-commerce export, SCOMET, and merchanting trade from India.
The strategy strongly emphasizes export development and promotion, shifting from an incentive system to one that is facilitating and built on the technological interface and collaborative principles.
Building on prior “convenience initiatives,” the guideline also codifies implementation procedures in a paperless, online world.
Here are the key points of the new foreign trade policy:
The Foreign Trade Policy (FTP) 2023 is a dynamic, open-ended policy that will accommodate emerging needs.
The policy aims to increase India’s exports to $2 trillion by 2030.
The four pillars of FTP 2023 are Incentive to Remission, Export promotion through collaboration, Ease of doing business, and Emerging Areas.
The policy is based on the continuity of time-tested schemes facilitating exports and a nimble document responsive to the trade requirements.
The FTP 2023 encourages recognition of new towns through the “Towns of Export Excellence Scheme” and exporters through the “Status Holder Scheme.”
The new FTP is offering a one-time Amnesty Program for exporters to finish the previous round of pending authorizations and begin anew.
The strategy strongly emphasizes export development and promotion, shifting from an incentive system to one that facilitates trade and is based on concepts of cooperation and technological interface.
Exporters are being given more credit by using automatic IT technologies with a risk-management framework for various permissions under the new FTP.
Regional Offices will now administer duty exemption programs for export manufacturing in a regulated IT system environment, doing away with the necessity for a manual interface.
The FTP 2023 expands on prior “ease-of-doing-business initiatives” by codifying implementation procedures in an online, paperless environment.
Due to reduced pay structures and IT-based programs, MSMEs and other groups will find it simpler to enjoy export benefits.
In addition to the 39 existing towns, four additional towns—Faridabad, Mirzapur, Moradabad, and Varanasi—have been named Towns of Export Excellence (TEE).
Overall, the new FTP aims to promote exports, enhance competitiveness, and promote sustainable development in the Indian economy.
