Why are real-time forex rates important?

With something as fast-moving as foreign exchange, real-time forex rates really matter.
They show the latest value of one currency against another, updated frequently, so you can see how a currency pair is moving minute by minute.

This type of data is most commonly used by traders to analyze currency movements and take positions on various forex pairs.
But it’s just as important for businesses that deal internationally because it helps you manage currency risk and understand the true cost of cross-border payments, billing, and supplier payouts.

Why are HDFC's forex rates different from market rates?

If you’ve ever compared the live market rate with what a bank quotes, you’ve probably noticed they don’t match.
That’s because banks, including HDFC, add a margin and use different buy/sell rates instead of the mid-market rate.
The extra spread helps them cover operating costs, manage currency fluctuations, meet compliance-related expenses, and earn a profit.

Here’s a closer breakdown of why bank forex rates often don’t match the market rate:

1. Spread

• A big reason bank rates don’t match market rates is the spread.
  Banks aren’t only exchanging currency with customers, they’re also trading with other banks in the interbank market. The rate used between banks is usually tighter, while the rate offered to customers includes an added margin, which creates the gap you see.

• Because banks trade with other banks in very large volumes, they usually get access to tighter, wholesale-style interbank rates.
  The rate you get as a customer is typically a retail rate that includes an additional margin on top of the wholesale rate.

• So even if the interbank market shows a cleaner “base” rate, the customer-facing quote will often be slightly higher (or less favourable) to account for the added spread.
  On the other side, if you’re selling US dollars to the bank, the bank may quote you a lower rate (for example, 0.96).

• In this, the bank effectively earns the difference between its buy and sell quotes, often a few cents per dollar.
  That gap between the two rates is the spread, and it’s one of the main ways banks make money on forex conversions.

The spread, if left unchecked, can widen or narrow over time depending on a few factors. It’s often influenced by factors like:

• The size of your transaction

• The bank’s internal pricing policies

• Local and international regulations

• Central bank interest rates and overall market conditions

2. Additional transaction fees

• Besides the spread, bank forex rates can differ due to additional charges added to the transaction. These may be a flat processing fee, or a percentage fee is applied to each forex conversion.

• These extra charges also add to a bank’s earnings, but they’re not only about profit, but also act as a cushion against currency-related risks such as inflation, sudden policy or regulatory changes, and unexpected events like wars or natural disasters.

• By using add-on charges like flat fees, banks can cover these uncertainties while taking on less exposure to market swings.

• Banks usually have higher operating and processing costs for international payments, which is why their charges can be steeper than many modern fintech platforms.

If your goal is to cut down the overall cost of cross-border transfers, it’s worth comparing alternatives like Infinity, which markets itself as offering 0% forex markup.

3. Market volatility

Currency rates move all the time and these shifts are driven by supply and demand, along with a wide range of macroeconomic factors.

Because of that uncertainty, banks typically tweak their spreads and charges to protect themselves from sudden market moves and potential losses.

For instance, if a currency is likely to weaken, banks may widen the spread to reduce their risk. If a currency is expected to strengthen, the spread is often tighter and the overall rate may be a bit more favourable.

4. Taxes and regulatory fees

The Reserve Bank of India has put down the rules banks must follow and it covers regulations, compliance requirements, and policy frameworks.

Meeting these requirements adds to a bank’s compliance and operational costs, and some of that cost is typically passed on to customers through charges or less favourable rates.

This can show up as wider spreads, extra fixed charges, or other related fees. And since RBI guidelines can shift based on both domestic and global conditions, the overall cost of a transaction isn’t always constant and it can change over time.

What is an effective rate example?

• The (REER) Real Effective Exchange Rate is a weighted average that measures a country’s currency against a basket (index) of major currencies.
  It’s calculated using trade-based weights, so it reflects how the currency is performing relative to the countries India trades with, based on comparative trade balances.

• The REER gives a clearer picture of a currency’s true strength because it adjusts for inflation.
  In simple terms, it shows the currency’s purchasing power compared to others. When a country’s REER falls, exports can become more competitive, but imports usually get costlier.

• For instance, if the Indian Rupee weakens against the British Pound, buyers in the UK can purchase Indian goods at a lower effective price, which can help exports.
  At the same time, anything imported from the UK becomes costlier for Indian buyers. So while Indian products and services may look more affordable abroad, a business in India importing UK supplies would end up paying more.

How can you check HDFC Bank's forex rates?

Finding HDFC Bank’s forex rates is pretty straightforward. You can go to HDFC Bank’s website and look for the section on forex service fees/rates.
Another quick way is to search “HDFC forex rates” on Google, the official page shows up right at the top.

You can also walk into any HDFC Bank branch to check the latest forex rates. Most branches provide currency exchange services and typically support a wide range of foreign currencies for transactions.

How is Infinity better than HDFC Bank's forex rates?

If you run a business that gets paid from abroad or pays international vendors, bank forex conversions can quietly get expensive.
The headline rate may look fine, but spreads, processing charges, and settlement delays can still eat into your margins.

Receive in 50+ currencies.
Get paid in 50+ currencies like USD, GBP, EUR, JPY, AUD, and more, without making clients do anything complicated.

Transparent 0.5% all-inclusive pricing
A flat 0.5% fee covers everything, so there are no surprise deductions or add-on charges later.

Live FX rates, zero markup
Convert at real-time FX rates with 0% markup, so you keep more of what you earn, and payouts stay predictable.

24-hour settlement
Payments can settle in as little as 24 hours, instead of the 3–5 business days common with traditional bank routes.

Fully compliance
Infinity handles documentation and follow-ups and provides an instant, free FIRA for every international payment.

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

Conclusion

International payments can look simple, but the real cost often sits in the exchange rate you’re offered.

With banks like HDFC, the final rate you get can differ from the market rate because of reasons like spread, operational charges, volatility buffers, and compliance-related costs, on top of this, taxes like GST on forex conversion add on to it.

The best way to protect your margins is to compare rates before converting, understand TT buy vs TT sell, look out for extra fees, and time conversions when rates are favourable.

If you are looking for fewer surprises, live FX with zero markup, transparent pricing, fast settlement, and built-in documentation.

Infinity can make cross-border payments feel far more predictable.
Ready to simplify your international transfers? Try Infinity. Sign Up now!

Frequently asked questions

1. How much does HDFC charge for currency exchange?

HDFC Bank's forex service currently charges a flat fee of INR 500 for amounts up to USD 500 or its equivalent, and INR 1000 for amounts exceeding USD 500 or its equivalent.
And these charges depend on the transaction amount, transaction type, and other factors.

2. What is the FX fee?

FX fees, or foreign exchange fees, refer to the charges applied by banks and financial platforms when converting one currency to another.

3. Do banks convert currency for free?

No, banks usually charge a small fee for converting currency. This changes depending on the currency, transaction type and amount, and other factors.

4. How do I avoid FX fees?

To reduce FX charges, consider using Infinity. Most platforms and banks charge FX fees along with other costs and markups. However, Infinity provided live FX rates, zero markups and zero hidden fees.

5. What is the reload fee for HDFC Forex Cards?

The reload fee for HDFC Forex Cards is ₹ 75 with applicable GST per reload transaction.