The gap between the open market and the interbank rate

The gap is the open-market selling price minus the interbank rate. It is the premium you pay to buy dollars over a counter rather than at the interbank rate. This page explains what the gap means on a real amount of dollars, why it was once large, and what can make it widen again.

What the gap costs on real money

The open-market selling price over the interbank rate, per dollar and per thousand dollars.

Interbank rate of: 02.11.2026

What the gap is

The gap is the difference between the open-market selling price and the interbank rate. It is measured in rupees and as a per cent of the interbank rate. The table above shows the gap for today, along with the two rates that make it up.

The gap is the cost of the counter. It is the margin the money changer charges for the convenience of buying dollars in cash, without a bank account, and for the risk of holding cash dollars.

What the gap means on a real amount

On a real amount of a thousand dollars, the gap is the rupee amount you would pay over the interbank rate if you bought those dollars at the open-market selling price. The table above carries the arithmetic, so there is no need to compute it here.

The gap is not a fixed amount. It moves with the two rates. When the interbank rate moves and the open-market rate does not, the gap changes. When the open-market rate moves and the interbank rate does not, the gap changes.

Why the gap was once large

The gap was once large because the open market was a large premium over the interbank rate. That happened when there was a shortage of dollars in the open market, or when the State Bank's interbank rate was not trusted as a true market rate.

In those years, the open-market rate could be many rupees above the interbank rate. The gap was the price of getting dollars outside the banking system, and it was paid by travellers, students, and families receiving money from abroad.

Why the gap is small when the two rates are close

When the two rates are close, the gap is small. That happens when the open market has enough dollars to meet demand, and when the State Bank's interbank rate is close to the rate that money changers are willing to deal at.

A small gap means the counter premium is low. Buying dollars over a counter costs only a few rupees more per dollar than the interbank rate. That is the situation measured at launch: the open-market selling price sits about one per cent above the interbank rate.

What can make the gap widen again

The gap can widen again if the open market runs short of dollars, or if the State Bank's interbank rate is held at a level that money changers do not believe. A sudden demand for dollars, such as before a holiday or during a political crisis, can widen the gap.

The gap can also widen if the State Bank restricts the supply of dollars to the open market, or if the interbank rate moves sharply and the open market does not follow. The gap is a barometer of pressure in the dollar market.

Who the gap falls on

The gap falls on anyone who buys dollars over a counter. It is paid by travellers, students going abroad, and families who need cash dollars. It is not paid by banks or large businesses, who deal at the interbank rate.

The gap is a cost of being outside the banking system. If you have a bank account and can receive dollars through a bank, you may avoid the gap. If you must have cash dollars, the gap is the price of the counter.