Glossary entry

Interbank rate

The interbank rate is the rate at which banks trade currencies with each other in the wholesale market. It is closely related to the mid-market rate, and people often use the two terms for the same idea. Ordinary customers are not usually offered it directly, because banks and providers add a margin for their own costs and revenue. It is still useful as a yardstick: if the rate on your quote is far from the interbank level, that gap is a cost you are paying through the rate. See also: mid-market rate, margin, markup, and the guide Mid-Market Rate vs the Rate You Get.