Why are the currency exchange rates charged by banks so bad?

  1. wandererh profile image75
    wandererhposted 6 years ago

    Why are the currency exchange rates charged by banks so bad?

    My forex broker quotes the rate for USD/SGD at 1.2875/1.2878, a spread of 3 pips.  If I were to go to the bank, I can probably see quotes like 1.2975/1.2775, a spread of a massive 200 pips.  Is this daylight robbery, is do the banks have a reason to charge such an uncompetitive spread?

  2. ramkimeena profile image61
    ramkimeenaposted 6 years ago

    Currency exchange rates are used by those people who export their products or import their requirements. In other words, foreign exchange transactions are conducted by the traders - either exporters or importers. Banks provide help to them through hedging facility. They quote forward contracts to them and help them to avoid foreign exchange loss. But when a customer approaches the bank suddenly for changing currency or traveler cheque, the banks quote a spot rate which is usually higher than the forward rates. Spot rates change every day and even within a day from hour to hour.

 
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