Which Currency To Take Along When Going Abroad From India?

Indian currency has depreciated a lot against the USD and because of that itself, foreign travel out of India has become a lot more expensive during the last few years. On top of that, banks and foreign exchange dealers like Thomas Cook make foreign currency even more expensive by adding their own fees and charges. There is another reason for the USD becoming more expensive for genuine Indian tourists. That is the foreign currency demand generated by those individuals two travel to foreign countries like UAE and bring gold on their person when they return. In such circumstances, a traveller must think before spending money on foreign currency. Which currency to carry is equally important as where to buy it. I have never been a fan of banks or the Thomas Cook types when it comes to buying Forex in India. During my four year stay in Chandigarh from 2009 to 2013, I was very happy for being able to buy US dollars at rates just 10 paisa more than the inter-bank rate from an exchange shop in the Sector 15 market there. It was a chemist shop that doubled up as an exchange shop too - Chaudhary Chemists or something like that. You may live in any city but when a need arises to buy a foreign currency, first try to look for a reliable exchange shop. A bank or a exchange company like Thomas Cook should be your last option. Also try the online forex rate comparison services like Nafex.com. Let us now move on to which currency to buy. Keep reading...


Airport Foreign Exchange Counter Display

Why I prefer US Dollars

I have extensively travelled to Thailand, Cambodia, Singapore, Macau, Hong Kong, and Sri Lanka during the last few years. With the exception of Singapore I prefer to carry USD wherever I go. Let me first clarify on why Singapore is different.

Indian tourists are allowed by Reserve Bank of Indian to carry Indian currency up to Rs. 25,000 per person when they travel abroad. A family of four on a holiday to Singapore can thus take along a total of Rs. 1 Lakh in Indian currency. After landing in Singapore, just go to Mustafa Center where the exchange counters are open 24 hours a day. In that place you will be able to buy Singapore Dollars against Indian rupees at the best possible rates. No exchange shop or bank will be able to match those rates. You may just need to have about a 100 Singapore dollars in pocket to meet the initial expenses before you are able to go to Mustafa Center. That 100 SGD can be withdrawn from an ATM at Singapore's Changi Airport. So when leaving India for Singapore, just carry INR. Read my article on Best Money Exchange Rates in Singapore.

Why USD For Thailand And Other Countries?

If you are travelling to Cambodia, the local currency in use is mostly USD. Prices in shops and restaurants are displayed in USD only. If you are carrying lots of small denomination USD bills, you will do just fine in Cambodia. For Thailand / Hong Kong / Macau / Sri Lanka or any other country for that matter, US Dollars will get you the best possible exchange rates when you are abroad. A question can be asked here that buying USD in India and then converting USD to another currency abroad means exchanging twice and paying exchange fees and charges twice. Yes, but consider this:

If you buy USD in India from a reliable exchange shop, may be after going through Nafex.com, you will usually pay less than 1% premium over the inter-bank rate of USD. To see the inter-bank rate of USD against Indian rupee, go to Google and type "usd inr rate" in lower case and press Enter. The USD-INR inter-bank rate will be displayed instantly on your screen. And if you look around and avoid banks, you should be able to buy USD at less than 1% premium in any city in India. From my experience of travel in Thailand and Hong Kong, I can tell you that USD can be exchanged for Thai Baht in Thailand (Thai best exchange rate link) and for Hong Kong Dollars in Hong Kong (HKD best exchange rate link) again at less than 1% premium over the inter-bank rate. You just need to know where to go. Now try buying Thai Baht in India even from an exchange shop or a bank or wherever, no one will sell THB to you at a premium less than 6%. Its a simple math, 2% premium when exchanging twice and 6 or 7% premium when exchange once directly in India.

Selling USD Back Is Also Easy

If you have any leftover USD when you return to India, selling those will also be easy. Just try selling to an exchange shop rather than a bank because banks again charge a fee & commission when buying back Forex they themselves have sold to a customer.

Totally Avoid The Airport Exchange Counters

Exchange counters at airports in India and anywhere else in the world charge premium over inter-bank rates up to 10%. So when they sell a currency to you, they will sell at 10% premium but when they buy it back they will buy at 10% discount. Its horrible, buying USD or any other currency from an airport exchange counter while leaving India and selling the left over currency to them while returning will result in a loss of 20% of your money. Check this out the nest time you go to an airport. Note down the inter-bank rate of any currency and compare the rates at the airport, you will know.

You May Want To Avoid Prepaid Forex Cards

Prepaid Forex cards are sometimes sold by banks and other entities by promising you the earth. However, in the end all those cards do is to make your foreign visit more expensive. Please read my article on How Prepaid Forex Cards Make Your Hoilday More Expensive.

Be Flexible

What I wrote above is a general guideline and you should see your actual situation at the time when you need to buy a foreign currency. Use your knowledge to calculate the best option for you and if you are able to directly buy a currency other than USD in India, please go ahead and do that. Also, if it is not too much of a trouble, please share your experience using the comment form below this article so that your fellow citizens benefit from that information.