Understanding the difference in exchange rates across banks and forex bureaus

External question — Personal Finance Stack Exchange Author: nknj Original post: https://money.stackexchange.com/questions/36792 License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I recently moved to Ghana and discovered that the exchange rate at the banks here is somewhere around 3.4 GHS per USD but the exchange rate at all the forex bureaus I visit is around 3.7 GHS per USD. Also, I looked at the interbank exchange rate at the Central Bank in Ghana and it is around 3.19 GHS per USD . I realised that the best way for me to bring money into the country is to carry USD in cash into the country and then exchange it at a forex bureau, instead of doing a bank wire. 2 Questions: What is causing this huge difference in exchange rates across the different financial institutions? If I run out of the USD I carry into Ghana, what can I do to get more money into the country and use the forex bureau rate (without having to leave Ghana, of course)?

External answer — Personal Finance Stack Exchange Author: rupweb Original post: https://money.stackexchange.com/a/36822 License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/ Adaptation: HTML converted to plain text; contact email addresses removed. There are lots of reasons for the differences in price. Can you go to (a) bank, (b) forex bureau and (c) central bank and post back both bid and offer prices at a given time so we can consider the spread? What you've said above for (a) and (b) are presumably USDGHS offer prices, because they are higher than the (c) central bank price. If a bank or bureau bid price was higher than the central bank offer price then you could buy GHS from the central bank and then sell them to a bureau for a higher price, an almost no risk arbitrage, other than the armoured car to deliver the funds from central bank to bureau. What you've posted is: (a) a bank will sell you 1 USD for 3.4 GHS (b) a bureau will sell you 1 USD for 3.7 GHS (c) we can see the bid/offer for central bank is 3.1949/3.1975 which means the central bank, if you have an account, will sell you 1 USD for 3.1975 GHS. You clearly want to buy USD from the central bank, then the bank, then the bureau. Anyway, the reason for these differences is all to do with liquidity conditions in the local areas, the customer types, and the frequency of orders versus inventory... Think about it. The central bank has the most frequency of orders and the biggest customers so it offers the lower price, then the bank, and then the bureau. I think the bureau is the worst price there... You have to explain further :)