Finding the best rupee conversion can feel like a challenge. You’ve worked hard for your dollars, pounds, riyals or other foreign currency. The last thing you want is for your international money transfer to eat up your salary in fees.
In this guide, we’ll review how currency exchange works, why the rupee has such high exchange rates, and how you can get a better deal on an INR rate.
Currency exchange explained
An exchange rate highlights the value of one currency compared to another. These rates are used for currency exchange. For example, you may see the following when looking for dollar to rupee rates:
This means that the value of one US dollar is 73.77 rupees. In this example, USD/INR is called a currency pair.
One thing you will notice is that the value of a currency pair changes often. Two years ago, the USD/INR was close to 67 rupees. So why did it jump?
The exchange rate is calculated on several factors between the two currencies, such as:
- Differences in inflation (how much a rupee can buy over time);
- Differences in interest rates;
- Demand for foreign currency in each country;
- Government debt;
- Import/export activity for both countries; and
- The stability of each country’s economy and government.
As you can see, issues like inflation, trade activity, and demand for foreign currency can change on a daily, monthly, quarterly, or annual basis. Because these change regularly, the value of a currency pair changes often.
In other words, the rate you get today may not be the one you get tomorrow.
Why is rupee conversion so high?
The major reasons it takes so many rupees to buy a single dollar, pound, or riyal, are that India has:
- A higher rate of inflation;
- Higher interest rates;
- Government debt;
- A greater demand for foreign currency; and
- Volatility in the economy.
Market forces like supply and demand generally determine rupee rates, but the Reserve Bank of India can step in if the exchange rate begins to swing wildly. You can read more about this type of “managed float” system in our guide to exchange rates here.
The takeaway? Exchange rates will go up and down over time. That’s why it’s more important for you to focus on lowering your fees than on waiting for a great exchange rate.
There are many ways to convert your foreign currency to rupees, and rupees to another currency. But where they really make a difference to you is through their fee structure.
Sending money to India: converting to rupees
There are two basic options for sending money to India and converting your dollars, pounds, riyals, or other currency into rupees. You can choose between using a bank or a money transfer service.
Banks: If you want a dollar to rupee, pound to rupee, dirham to rupee, or another similar exchange, you have two methods with an Indian bank: a transfer or a foreign currency check collection. Both incur fees usually set as a percentage of the money sent.
Money Transfers: If you’re seeking a more affordable way to transfer money, it’s usually better to use a money transfer service. This is because their fee structure is different from traditional banks. Digital companies, like money transfer apps, are often the best deal.
With the Digital India initiative and the rising use of digital wallets and online banking, you will probably be able to send money directly to your or your relative’s Indian bank account through apps like Remitly. These transaction funds will convert into rupees by the time the funds are received.
Using Remitly to send to India
Let’s consider the Remitly platform. Remitly allows bank deposits to hundreds of Indian banks and UPI deposits (virtual payments) at an affordable rate. For transfers less than $1000 USD, both the economy and express transfer fee is for the same flat rate of 3.99 USD.
Once you set up an account and verify your identity for the first time, your transfers are very easy.
Remitly usually only needs your name, bank account information, phone number, and reason for the transfer. Sending a money transfer to India can really be that simple.
With the Remitly app it’s possible to send from the United States, the UK, Australia, Canada, Singapore, and many other countries.
Sending money from India: converting rupees to another currency
If you’re sending or exchanging rupees to another currency, the scenario is similar with a bank. Let’s say you want a rupee to dollar, rupee to pound, rupee to riyal, or similar currency exchange.
With most banks, you have two options. You can either convert your rupees with a Foreign Currency Demand Draft, which you need before you leave the country, or you can make an online transfer.
If you choose to transfer your money online, you’ll often find higher fees and longer wait times. First, you can only remit outside of India for certain purposes, otherwise, you will need to visit your bank branch in person. Then, there are minimum and maximum limits on transactions.
What’s more, you will have to pay bank commissions and GST (Goods & Services tax) every time you send money this way.
What about exchanging rupees outside of India?
There are many ways to exchange rupees for other currencies, whether you need US dollars (USD), Swiss francs (CHF), Japanese yen (JPY), or any other. Some options include:
- Foreign currency exchange at a bank;
- Airport currency exchange desks;
- Bank wire;
- ATMs; and
- Credit cards.
Usually, changing cash through a bank or at the airport currency exchange desk is the most expensive option. Certainly, the airport exchange is convenient if you’re in a hurry, but you won’t get the best exchange rates. The same is true for buying the currency at a bank.
A bank wire is a third option. If you have a bank account in both your origin and destination countries, you can opt for this. Be sure to check the processing fee.
If you have just arrived in a country and don’t have a bank account there, you can usually convert your money through withdrawing cash at an ATM.
If you’re on a short visit, you can simply use your international credit card, too. Both ATM withdrawals and credit card payment options are ideal for tourists, but can become expensive for students and immigrants. If you’re planning to stay for a longer residency, it’s often a good idea to open a bank account there.
Finding the best rupee exchange rate
However you decide to transfer and/or exchange your money, you’ll want to understand how to find the best exchange rates.
If you’d like, you can calculate the exchange rate manually and subtract fees, commissions, and taxes to see which rate is better. Most likely, you don’t need to calculate the rates yourself. But it can be useful for large sums, or for when you want to verify the rates you see with a particular program.
After all, currency converters online never include the costs of conversion in their calculations. While a search engine’s converter may show you 73.77 USD/INR, that is not the actual rate you will be using after factoring in costs.
Here is the general formula:
(Currency 1 ) / 1 x (Currency 2) / 1 (Currency 1) = Converted amount in Currency 2
Let’s look at some examples using real numbers.
Calculating exchange rates: three hypothetical examples
These scenarios are intended to help you understand how to manually calculate an exchange rate. You can, of course, substitute different quantities depending on what you are planning to exchange.
How to find pound to Indian rupee rates
So if we want to send 100 GBP:
(100 GBP / 1) x (98.66 INR / 1 GBP)
This would get you 9866.36 INR from 100 GBP.
Once you have this number, you can subtract the costs, fees, and taxes to get the total amount.
For example: let’s imagine that a money transfer company or bank charges a fee of 1,568.69 INR or 15.90 pounds on your transfer. So, we would subtract that fee from the original total to see how many rupees we really get for our pounds:
9866.36 – 1,568.69 = 8297.67
With apps like Remitly, the cost would be a minimum of 2.98 GBP or 295.91 INR. This means you would save over 10 pounds or 1000 rupees on each transaction.
How to find dollar to Indian rupee rates
So if we want to send 100 USD:
(100 USD / 1) x (73.77 INR / 1 USD)
This would get you 7377 INR from 100 USD.
Once you have this number, you can subtract the costs, fees, and taxes to get the total remittance amount.
How to find riyal to Indian rupee rates
Let’s imagine we want to send 100 SAR:
(100 SAR/ 1) x (19.69 INR / 1 SAR)
This would get you 1968.99 INR from 100 SAR.
Similar to the previous examples, you can subtract the costs, fees, and taxes to get the total amount.
Getting the best deal
There are many ways to convert rupees to other currencies and vice versa. But not all of them are made equal.
When looking for a way to send money home, every dollar matters. That’s why choosing low-fee and online solutions is so important. Not only can your family have instant access to financial stability, but you can also send more at the same time.
Remitly makes international money transfers faster, easier, more transparent, and more affordable. Our reliable and easy-to-use mobile app is trusted by over 3 million people around the world. Visit the homepage or download our app to learn more.