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What Is The Interbank Rate and how it affects the currency markets

Published on 7 February 2017 in More Information - Pages by Raffick Marday

What Is The Interbank Rate?




The interbank rate is one of the most significant interest rates in the financial world, upon which trillions of transactions take place. Here, we explain some of the most important facts.

What Is The Interbank Rates?




As the name implies, the interbank rate is between various banks. This means that each exchange represents an arrangement between various financial institutions to exchange a certain amount of money at the agreed rate at a particular time.



It is the rate the leading banks or finance houses charge each other while trading huge amounts of currency. Occasionally, this is known as the spot rate.



The interbank rate is different from the tourist rate and one cannot buy foreign currency at that rate since you will be dealing with significantly small amounts of money. Simply put, it is difference between retail and wholesale rates. The figures quoted in mass media are normally the interbank rates.

What is Interbank Exchange Rate


Why is it so important?



In addition to helping to determine the rate of other transactions, the interbank rate also acts as a measure of confidence in the financial system and represents the trust financial institutions have in another banks financial well-being.

The interbank market enables financial institutions with liquidity issues to borrow from other financial institutions with excess amounts of foreign currency, allowing them to avoid holding extremely high amounts of their base assets as liquid cash. The rate is normally fixed by a certain number of banks, but the price changes from time to time each day.



Very large transactions are common and can take place within a matter of moments. For people trading forex online, the figures quoted on the leading trading platforms are determined by the interbank rates.

Only the leading financial institutions have access to the interbank rates, but they are used by companies other than finance houses to determine how various currencies are trading against each other.

It is important to keep in mind that these prices are different to the price that both organizations and individuals get when selling or buying foreign currency from any financial institution. The price you get is usually the commercial rate and not the wholesale rate, which is only available on the interbank market.



The interbank market emerged without any major regulations from the government or related authorities. Usually, there is no oversight body for interbank rates and currency trading other than the national or local banking rules.
So how does the Interbank Rate market insights and forecasts, currency charts and the latest industry news.

What is Interbank Exchange Rates

The exchange rates shown below are based on today’s Interbank rates at 07.15 AM. Please use the currency calculator for live currency exchange rates or if you require a free foreign exchange quotation then please use the request info to get a free individual quotation with no obligation to trade.

No matter how much money you want to send abroad, use Currencies direct rather than your high street bank and see how much money you will save compared to bank exchange rates charged.

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