The open market currency rates and inter-bank currency rates are both used to determine the value of one currency relative to another, but they differ in the way they are determined and used.
Open market currency rates, also known as retail rates or cash rates, are the rates at which individuals and small businesses can buy or sell foreign currencies through currency exchange dealers. These rates are determined by the supply and demand of currencies in the open market, and may include a markup or commission by the currency exchange dealer. Open market currency rates are typically higher than inter bank rates due to the added costs of operating a retail business and the need to make a profit.
Interbank currency rates, on the other hand, are the rates at which large financial institutions such as banks and other financial institutions buy and sell currencies with each other. These rates are determined by the supply and demand of currencies among the banks, and are typically much lower than the open market rates. Inter bank rates are also used as a benchmark for setting exchange rates in various financial transactions, such as international trade and investment.
Overall, the main difference between open market and inter-bank currency rates is that the former are determined by the market demand and supply for currencies, and are typically higher due to the added costs of running a retail business, while the latter are determined by large financial institutions and are generally much lower.
