HDFC Forex Rates Explained - How to Save on Transfers

Different financial institutions and platforms offer different forex rates, and it's essential to know which one is best for your business. In this article, we dive into HDFC Bank's exchange rates and how you can save on international transfers!

The Housing Development Finance Corporation Limited, more commonly called HDFC Bank, was established in 1994 and initiated its operations in January 1995 in Mumbai. It was initially a Scheduled Commercial Bank, but has since expanded its operations to provide a vast range of financial and banking services. 

In fact, HDFC Bank was the first financial institution to receive an "in principle" authorization from the RBI (Reserve Bank of India) to establish a bank in the private sector. Among its many offerings are its foreign exchange services. Before delving into what HDFC forex rates are, it's crucial to understand what exchange rates mean. 

TT buy/sell rates 

Another important aspect of forex is the TT (telegraphic transfer) buying/selling rate. A telegraphic transfer, or TT, broadly refers to transferring money from one bank account to another, and is generally used between different countries and currencies. 

The TT buy rate is the rate at which a bank converts foreign currency into local currency. Conversely, the TT sell rate refers to the rate at which a bank will convert the local currency into a foreign currency. 

An exchange rate refers to the relative value of a country's currency when traded for another country's currency. The strength or weakness of a nation's currency, therefore, has significant impacts on the country's trade, tourism, and other sectors. It also has a substantial effect on your business's financial operations, especially when dealing with foreign clientele and suppliers. 

HDFC remittance rates and foreign exchange rates can be found on their website or by visiting their branches in person. According to the HDFC website, these are some of their current forex and remittance charges: 

Foreign exchange transactions

Other foreign exchange transactions

It is also important to note that the Indian Government implements Goods and Services Tax (GST) on foreign exchange, effective since 1st July 2017. As such, FX conversion will also incur a charge for GST (18%).

The following are HDFC Bank's commission slabs for service tax applicable on FX conversions: 

HDFC Bank also provides a multicurrency forex card allowing up to 22 international currencies, including the following:

• USD dollar
• Australian Dollar
• AED (Dirhams)
• Canadian Dollar 
• Euro 
• Hong Kong Dollar
• Japanese Yen
• Singapore Dollar 
• Sterling Pound

HDFC's forex card rates include the following:

• Fee for issuing card: INR 500 plus applicable GST per card
• Fee for reloading: INR 75 plus applicable GST per reload transaction (currency-wise)

When dealing with something as volatile as foreign exchange, real-time forex rates become critical. They provide information (updated to the minute) on currency pairs (so the minute-by-minute exchange rate of two currencies). 

Primarily used by traders, this information enables them to analyze and bet on movements in the exchange rates of various foreign currency pairs. However, it is also a central part of running a global business, allowing your company to manage your foreign exchange risk, as well as determine the costs associated with international transactions. 

If you've ever checked forex market rates and bank rates, you may have noticed some discrepancies between the two. Typically, bank forex rates (including HDFC Bank) differ due to added markups and varying selling rates. These rates are used to cover their own costs, absorb potential losses from market volatility, maintain compliance charges, and generate a profit.

Let's take a closer look at why bank forex rates differ from market rates:

1. Spread

One of the primary reasons for the difference between market and bank rates is something called 'spread.' Banks don't just trade currencies with customers; they also exchange currencies with other banks. The difference between interbank exchange rates and customer exchange rates is different. 

Since banks typically trade currencies with each other in bulk quantities, the interbank forex rates are usually lower, wholesale rates. For example, the interbank exchange rate for buying a US dollar may be 1.00, while it may be 1.04 (which includes a small fee beyond the exchange rate) for customers. 

Conversely, if a customer tries to sell US dollars to a bank, they may be offered a rate of 0.96. Therefore, in this case, the bank will earn about 4 cents for every dollar exchanged. This 8-cent difference is known as 'spread," and helps the bank earn a profit. 

Spread can increase or decrease over time, and is affected by many other factors as well. For example, factors such as the transaction amount, bank policies, local and international regulations, and the interest rates set by the central bank. 

2. Additional transaction fees

Apart from the spread, the reason why bank forex rates are different could be due to additional transaction fees. These could be flat transaction fees or a particular percentage of every foreign exchange transaction. 

These additional fees also help the bank to generate a profit. However, it is also helpful to secure against other currency risks, like inflation, policy or regime changes, and exigent factors like war or natural disasters. Extra charges, such as flat fees, help banks achieve this while assuming less risk. 

Since banks often incur higher operational expenses for handling and processing transactions, they have higher fees than other financial platforms. If you're looking to save on international transactions, try platforms like Xflow, with 0% forex markup! 

3. Market volatility 

Exchange rates are constantly fluctuating, often referred to as being volatile. They are affected by supply and demand, along with other countless macroeconomic factors. Therefore, banks will usually adjust their spread and other fees to account for any potential losses. 

For example, currencies that are expected to depreciate may incur higher spread charges, whereas those expected to appreciate may incur lower spread charges. 

4. Taxes and regulatory fees 

The Reserve Bank of India sets rules, regulations, bank rates, and compliance measures that all banks must follow in the country. Adhering to these regulations often increases compliance costs for banks, which customers then bear to an extent.

These may translate into higher spread rates, additional flat rates, and other associated costs. The RBI's regulations can also change depending on domestic and global factors. Thus, transaction costs are constantly changing. 

A real effective exchange rate (or REER) refers to the weighted average of a nation's currency related to an index of other major currencies. It is determined by comparing the relative trade balance of the country's currency with every other country on the index. 

While taking into account inflation, the real effective exchange rate measures the actual strength of a country's currency. Put simply, it reflects the purchasing power of that currency compared to others. When a currency's REER weakens, a country's exports may be boosted, but imports would also become more expensive. 

For example, if the Indian Rupee becomes weaker in comparison to the British Pound, Indian goods become cheaper for British buyers, which boosts exports. However, imports would become more expensive as well. In this case, Indian goods and services would become cheaper. So if your business had to import supplies from the UK, it would cost you more. 

Checking HDFC Bank's forex rates is a simple process. You can visit the bank's website and navigate to the "Forex Services Fees" section. Additionally, you could simply type "HDFC forex rates" into your search engine, and it would take you directly to the page. 

Additionally, you can visit all HDFC Bank branches to know more about their forex rates. All of their branches offer exchange services and large baskets of currencies to transact with. 

When running your business, using banks for forex can be costly and cut into profits. Luckily, this is where Xflow steps in. Our platform helps you cut down forex costs, doesn't charge any forex makeup fees, and allows you to keep your hard-earned money!

Xflow is one of the top cross-border payments platforms. We offer quick, reliable and digital-first cross-border payment settlements. Specifically designed for modern business environments, Xflow helps your company navigate the complex world of global payments using a customer-centric experience and cutting-edge technology. 

Here are some of our offerings:

• No hidden fees: We provide users with live exchange rates, zero markup fees, and no hidden fees. Compared to banks and other payment platforms, which often charge up to a 3-4% markup, Xflow helps your business save up to 50% on FX costs. 

• No transaction limit: With Xflow, there are no transaction limits per invoice. 

• Locked forex rates: With Xflow, you can also lock the current foreign exchange rate for up to 45 days. This allows your business to avoid market volatility. 

• Mid-market rates: Unlike HDFC Bank, Xflow offers mid-market exchange rates. This provides better transparency, reduces the risk of currency fluctuations, and improves savings. 

• Local payment methods: Xflow supports local payments, enabling your international clients to utilize methods like FedWire or ACH for swift payment settlement. 

• Fast settlements: Tired of banks taking days to settle your funds? Xflow will ensure your payments are settled within 1 business day, improving both cash flow and operational efficiency. 

Here's a table comparing Xflow and other payment platforms with respect to forex markup:

In today's global digital landscape, you need a payment platform that is specifically tailored to your needs. The good news? Xflow provides just that. We simplify every step of your transaction process, allowing your financial teams to focus on growth strategies instead of managing the hurdles that come with cross-border payments. 

Enjoy faster payments with local payment methods, know the exact INR amount you will receive, and automated compliance with our one-click e-FIRA. Xflow also has a transparent 1% fee structure, or $8 per transaction.