Forex rates, also referred to as currency rates or nominal rates, are used by Swiss banks when performing currency conversions in certain types of financial transactions. Transactions in which forex rates are typically used include: purchases in foreign currencies settled by credit card or debit card (Maestro, Postcard, V Pay); direct transfers between bank accounts (wire transfers, for example) denominated by different currencies; transactions related to trading and holding securities (in online trading, for example). Many Swiss banks apply the forex rate to cash withdrawals made at out-of-network automated teller machines (ATMs). Currency exchanges performed at the till, on the other hand, are typically performed at the banknote rate.
The spread between the bid price and the ask price in a forex rate is typically narrower than the spread of a banknote rate. That makes the forex rate the more favorable rate for bank customers.
Forex rates can be applied both when currencies are bought and when they are sold. When a bank sells foreign currency to a customer, the exchange is made using the forex rate’s ask price (sell price). When the bank buys foreign currency from a customer, the forex rate’s bid price (buy price) is used.
In Switzerland, the forex rate is called the Devisenkurs in German and the cours de devises in French. While banks in many other countries advertise a single set of exchange rates rather than separate banknote and forex rates, many charge a cash fee for cash exchanges. In many cases this cash fee is not clearly listed or even hidden from customers. The use of separate banknote rates and forex rates by Swiss banks allows for greater transparency.