Compare exchange price offered by seller with interbank rate

Reserve Bank of India (RBI) Governor Sanjay Malhotra recently flagged concerns over the wide gap in foreign exchange (forex) pricing between retail and corporate customers.

- SANJAY KUMAR SINGH & KARTHIK JEROME

Reserve Bank of India (RBI) Governor Sanjay Malhotra recently flagged concerns over the wide gap in foreign exchange (forex) pricing between retail and corporate customers. He said these disparities were far greater than could be justified by operational costs alone. His comment underscores the need for retail buyers to exercise due diligence when purchasing forex.

Components of forex cost The first element is the exchange rate. "Typically, banks trade foreign exchange with each other at what is called the mid-market rate or the interbank rate. This is the rate Google shows when you search for the exchange rate between two currencies. When you compare the mid-market rate with the exchange rate offered by multiple providers, you may find that it differs significantly," says Shrawan Saraogi, Asia Pacific (APAC) head-banking and expansion, Wise.