Open Market vs Interbank Exchange Rate in Pakistan
If you check USD to PKR exchange rates in Pakistan, you may notice that banks, exchange companies, and financial websites show different rates.
This happens because the interbank exchange rate and the open market exchange rate serve different purposes.
The interbank market mainly involves banks and authorized dealers trading foreign currencies. The open market is more relevant for people buying or selling physical foreign currency through exchange companies.
Understanding the difference helps you choose the right rate when exchanging dollars, receiving remittances, making international payments, or following the value of the Pakistani rupee.
What Is an Exchange Rate?
An exchange rate tells you how much one currency is worth compared with another.
For example, if USD to PKR is Rs. 280, one US dollar is worth Rs. 280 at that quoted rate.
Common currency pairs in Pakistan include:
- USD to PKR (US dollar)
- AED to PKR (UAE dirham)
- SAR to PKR (Saudi riyal)
- GBP to PKR (British pound)
- EUR to PKR (euro)
The amount you receive or pay depends on the rate offered by your bank, exchange company, or payment provider.
What Is the Interbank Exchange Rate?
The interbank exchange rate refers to foreign-currency pricing in the banking market, where banks and authorized dealers trade currencies.
In Pakistan, this market is important for international trade, commercial payments, imports, exports, and other banking transactions.
The State Bank of Pakistan (SBP) publishes several foreign-exchange datasets, including weighted-average customer rates and mark-to-market rates.
However, the interbank rate is not necessarily the exact rate a bank offers to an individual customer. Banks may apply their own buying rates, selling rates, and transaction charges.
What Is the Open Market Exchange Rate?
The open market exchange rate generally refers to rates offered by licensed exchange companies for buying and selling foreign currency.
It is particularly useful for people who need physical currency for travel or personal use.
For example, if you want to buy US dollars before travelling abroad, you would normally check an exchange company's open-market selling rate.
If you have dollars and want Pakistani rupees, you would check its buying rate.
SBP also publishes open-market closing-rate information based on market data.
Open Market vs Interbank Exchange Rate: Key Differences
| Feature | Interbank Rate | Open Market Rate |
|---|---|---|
| Main participants | Banks and authorized dealers | Exchange companies and retail customers |
| Common uses | Banking, trade and commercial payments | Buying and selling physical currency |
| Typical users | Banks, importers and exporters | Travellers and individuals |
| Buying and selling rates | Yes | Yes |
| Physical cash exchange | Not primarily a retail cash rate | Commonly used |
| Rate differences | Depends on market conditions | Depends on market conditions and cash availability |
The actual rate available to you may vary by provider, currency, transaction type, and amount.
Open Market vs Interbank Rate: Example
Suppose the following rates are displayed. These are examples, not live exchange rates.
| Rate Type | USD to PKR |
|---|---|
| Interbank reference rate | Rs. 280 |
| Open-market buying rate | Rs. 281 |
| Open-market selling rate | Rs. 283 |
If you sell USD 1,000 to an exchange company:
USD 1,000 × Rs. 281 = Rs. 281,000
If you buy USD 1,000 from the same company:
USD 1,000 × Rs. 283 = Rs. 283,000
The rate you use depends on whether you are buying or selling dollars.
Why Is the Open Market Rate Different From the Interbank Rate?
The two rates can differ because the markets have different customers, costs, and sources of currency supply and demand.
Key factors include:
- Demand for foreign currency: Demand may increase during travel seasons or when people need dollars for personal or business expenses.
- Currency supply: Limited availability of physical notes can affect exchange-company rates.
- Imports and exports: Businesses need foreign currency to pay for imports, while exports generate foreign-currency receipts.
- Remittances: Money sent to Pakistan from overseas contributes to foreign-currency flows.
- Market conditions: Economic news, inflation, interest rates, and market expectations can influence currency prices.
- Dealer margins: Exchange companies include a spread between their buying and selling rates.
These factors can cause the gap between interbank and open-market rates to change.
What Is the Difference Between Buying and Selling Rates?
Buying and selling rates are important when comparing open-market and interbank exchange rates.
The buying rate is the rate at which a bank or exchange company buys foreign currency from you.
The selling rate is the rate at which it sells foreign currency to you.
For example:
- USD buying rate: Rs. 280
- USD selling rate: Rs. 282
If you sell USD 1,000, you may receive Rs. 280,000.
If you buy USD 1,000, you may need Rs. 282,000.
The difference of Rs. 2 per dollar is called the spread.
Formula:
Spread = Selling Rate − Buying Rate
Which Exchange Rate Should You Use?
The right exchange rate depends on your transaction.
Buying or selling physical dollars
If you visit an exchange company to exchange physical dollars, check its open-market buying or selling rate.
- Selling USD for PKR: Use the buying rate.
- Buying USD with PKR: Use the selling rate.
Making import payments
Businesses making international payments generally use their bank's applicable foreign-exchange rate. The final rate may differ from the published interbank rate because of bank margins and charges.
Receiving export payments
Exporters usually receive foreign-currency proceeds through the banking system. The applicable conversion rate depends on the bank and the transaction.
Receiving money from abroad
If someone sends you money from overseas, the remittance provider or receiving bank applies its own customer conversion rate.
This rate may differ from the open-market cash rate.
Making international card payments
International debit and credit card transactions may use the card network's conversion rate, the bank's applicable rate, and additional fees or taxes.
Always check your bank's terms to understand the final amount.
Interbank Rate vs Bank Customer Rate
The interbank rate and a bank's customer rate are not necessarily the same.
For example, a bank may use one rate when buying foreign currency from a customer and another when selling it.
A customer may also pay additional transaction charges.
Therefore, if you need to make an international payment or exchange money through a bank, ask for the actual rate applicable to your transaction instead of relying only on an online interbank figure.
Can the Open Market Rate Be Lower Than the Interbank Rate?
Yes. The open-market rate is not always higher than the interbank rate.
The relationship depends on market demand, currency supply, liquidity, and other conditions. The gap may be small at some times and wider at others.
There is no fixed difference that applies to every currency or every day.
Why Do Different Websites Show Different USD to PKR Rates?
Different websites may publish different types of exchange rates, including:
- Interbank rates
- Open-market buying rates
- Open-market selling rates
- Bank customer rates
- Mid-market rates
- Previous closing rates
Some websites also update their rates more frequently than others.
Before using a displayed USD to PKR rate, check its source, rate type, and update time.
Where Can You Check Pakistan's Exchange Rate Data?
The State Bank of Pakistan publishes foreign-exchange market information, including weighted-average customer exchange rates, mark-to-market rates, and open-market closing-rate data.
You can visit the State Bank of Pakistan's official website to find relevant exchange-rate information.
Remember that published market data may not be the exact rate offered by your bank or exchange company.
Frequently Asked Questions
What is the interbank exchange rate in Pakistan?
The interbank exchange rate refers to foreign-exchange pricing in the banking market, where banks and authorized dealers trade currencies.
What is the open market exchange rate?
The open-market exchange rate generally refers to rates offered by licensed exchange companies for buying and selling foreign currency, particularly physical cash.
Why is the open-market dollar rate different from the interbank rate?
The rates can differ because of changes in currency demand, supply, physical cash availability, market conditions, and dealer margins.
Which rate should I use when selling US dollars in Pakistan?
Use the exchange company's USD buying rate if you are selling physical dollars for Pakistani rupees.
Which rate should I use when buying US dollars?
Use the exchange company's USD selling rate if you want to purchase physical dollars.
Is the interbank rate always lower than the open-market rate?
No. The relationship between the two rates changes with market conditions.
Is the interbank rate the official dollar rate?
The interbank rate is an important market reference, but Pakistan does not have one single exchange rate that applies to every type of transaction.
Where can I check official exchange-rate information?
The State Bank of Pakistan publishes several foreign-exchange datasets. You should also confirm the actual rate with your bank, exchange company, or remittance provider before completing a transaction.
Conclusion
The main difference between the open-market and interbank exchange rates is the market in which they apply.
- Interbank rate: Mainly relates to foreign-exchange trading between banks and authorized dealers.
- Open-market rate: More relevant to individuals buying or selling physical currency through exchange companies.
Neither rate guarantees the exact amount you will receive or pay in every transaction.
Before exchanging dollars, receiving a remittance, or making an international payment, check the rate offered by your provider and confirm any additional charges.
Disclaimer: All figures used in this article are examples for educational purposes only. Actual exchange rates, spreads, fees, and charges may vary by provider and market conditions. Always confirm the applicable rate before completing a transaction.