BB(Bills Buying Rate) and TT(Telegraphic Transfer) Rate

 In Foreign exchange, there is two type transactions involved , which one have bills other have not;


TT(Telegraphic Transfer) Rates-

• In TT rates, No paper is involved.
• TT BUYING RATE- payment of foreign currency without any delay (payment of demand draft,mail transfer), payment of foreign bill to exporter, cancellation of foreign transactions, NOSTRO account credited,convert inward remittance to INR  
• TT SELLING RATE- Issue of demand drafts,mail transfers, cancellation of foreign purchased,outward remittance from INR to foreign currency

Bills Buying (BB) Rates 

• Bills are required for these transaction,there is time delay
• Bill Buying Rate-  Exporter sell bill to bank(bank will buy) and get INR. Hence rate will be less than TT buying rate.
• Bill Selling Rate- Importer wants pay to exporter, raise a bill for purchasing foreign Currency ( bank will sell) hence BB selling rate will be higher that TT selling rate.  

Problem:

• Inward of USD 100,000 by TT for credit to your exporter’s accounnt, being advance payment for exports(credit received in nostro account). What rate you will take to quote to customer, if market is 48.09/11?

Ans – 48.09

Explanation- Exporter is getting USD 100,000, hence bank will buy these USD to credit exporter account. Hence TT buying rate will applicable. Buying means low, hence 48.09 will be applicable rate.