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Tele Graphic Transfer (TT) Buying and Selling rate

& Foreign Exchange Rate


 Cash Buying - Rate at which Foreign Currency Cash deposited by
the customer is converted into rupees.

 Cash Selling - Rate applicable when a customer buys Foreign


Currency Cash from the bank.

 Travellers cheques'(T.C.) Buying - Rate at which Foreign


Currency Travellers cheques' deposited by the customer is
converted into rupees.

Travellers cheques'(T.C.) Selling - Rate applicable when a
customer buys Foreign Currency Travellers' cheques from the bank.

 Telegraphic Transfer (T.T.) Buying - Rate at which a Foreign


Inward Remittance received by Telegraphic Transfer is converted
into rupees.

 Telegraphic Transfer (T.T.) Selling - Rate applicable when a


customer sends an outward remittance through Telegraphic Transfer
What are value dates?
A value date for a foreign transaction is a day
on which the transaction takes place.
For inter-bank the transaction dates are two
types: 
Cash: Value today
Tom: value tomorrow 
For customers the dates are two types:
 Spot: Settlement on second successive
working day.
 Forward: Settlement at a pre-deiced future
date beyond the second successive working
day.
What is direct quote?
A direct quote is where the price of foreign
currency is quoted in terms of home
currency.
E.g. 1 USD = 66.48 INR (Rs.) 
What is an indirect quote? 
An indirect quote is where exchange rate is
quoted in terms of variable units of foreign
currency as equivalent to a fixed number of
units of home currency. Simply a reciprocal
of direct quotes.
What are inter-bank rates and how are
they different from market rates? 
Inter-bank as the name suggests are
buying and selling rates between any two
banks. Where as market rates are inter-
bank rates plus the bank margins and
commissions which generally depend on
the amount of the exposure. 
What is a TT? 
TT or telegraphic transfer is one of the mode
for inward or outward remittance.
 It is the fastest mode of transfer where the
buyers pays the bank the amount in home
currency and the bank pays the equivalent in
required foreign currency to the seller’s bank
by a telegraphic code.
 Examples of transactions where TT rate is
applied include payment or receipt of
demand drafts, mail transfers, Telegraphic
transfers etc. drawn on the bank. TT rate is
used for all transactions that do not involve
handling of documents by the bank.
 What are TT buying and selling rates? 
 TT buying rates are applied for purchase of foreign
currency by banks.
 It is applied to a transaction that does not involve any
delay in realization of foreign exchange by the bank.
 The rate is calculated by deducting from the inter-
bank buying rate the exchange margin.
 Thus, all foreign inward remittances which are made
payable in India are converted by applying this rate.
 TT selling rates is applied for selling foreign currency
to the customer by the bank for effecting remittances
outside India. This rate is calculated by adding
exchange margin to the inter-bank selling rate.
 What is bill rate? 
 Bill buying or selling by any bank involves handling of
documents by the bank. This rate is worse than the TT rate.
 In addition, the bank will also recover interest for the period
for which the bank has lent the funds.
 Bill buying rate is applied when a foreign bill is
purchased/negotiated/discounted.
 When a bill is purchased, the proceeds will be realized by the
bank after the bill is presented to the drawee at the overseas
centre.
 In the case of a usance bill, the proceeds will be realized on
the due date of the bill, which includes the transit period and
the usance period of the bill.
 Bill selling rate is applied for transaction involving transfer of
proceeds of import bills. Even if the proceeds of import bills
are remitted in foreign currency by way of DD, MT,TT, the
rate to be applied is the bill selling rate (and not the TT selling
rate).
What is Bid/Ask and spread?
 Bid is the inter-bank buying rate and Ask is
the inter-bank selling rate.
The difference between the two is spread.
In periods of high volatility spread may be
around 5-10 paise, where as in periods of
stability spread may be 0.25-0.50 paise.
What is a forward rate?
 A forward rate is the rate offered for
transaction beyond Spot date. Forward rate
= Spot rate + (premium/Discount). 
What are FRAs? 
Forward Rate Agreement is an agreement
between two parties to buy/sell at pr
determined price a pre determined rate. It
is an agreement on forward contract on
interest rates. 
TT Buying rate
Dollar / rupee spot buying rate
Less exchange margin
TT buying rate
Rounded off to nearest multiple of 0.0025
Bills buying rate
Dollar / rupee market spot buying rate
Add forward premium
Or
Less forward discount
Bills buying rate
Less exchange margin
TT selling rate
Dollar / rupee spot selling rate
Add exchange margin for TT selling rate
 TT selling rate
Bills selling rate
Dollar/ rupee spot selling rate
Add exchange margin for TT selling rate
TT selling rate
Add exchange margin for bills selling rate
Bills selling rate