What is a forex spread, and what it costs your business

If you are an exporter or importer (or a multi-national), and are sending or receiving foreign currency, your bank charges you twice on every exchange from or to Rand.

Firstly, there is the fee on each payment or receipt, which you can see on your bank statement.

And then, there is the FX spread or margin, built into the exchange rate you are given. You will not find it on your bank statement – and on most business payments it costs far more than the fee.

What is a forex spread?

A forex spread and a forex margin both mean the price gap between the interbank rate – the market exchange rate that the bank pays to buy or sell that currency on the open market – and the rate they give you. As an example, on 12 October 2026, with the market rate at R16.5278 to the US dollar, Standard Bank's public board sold dollars at R16.7140. That works out to a spread of about 18.6 cents, or 1.1%, which equates to R186,000 for every US$1 million exchanged.

And, of importance, this does not appear on your statement as a fee, but it is a hidden cost.

Note: If you trade forex on a forex trading platform, your broker's spread is something else: the gap between the buy and sell price on screen, usually a fraction of a cent, whereas the bank spread is what a bank takes when you convert funds using the banking system.

Why does the spread not show on your bank statement?

For every exchange deal, your bank statement shows the rand amount debited or credited to your bank account (and normally the FX rate you were given). But it does not show what the market rate was at that moment – the spread never gets a line of its own.

And, this hidden cost can often be a lot higher: on a US$100,000 payment made online through Standard Bank, its published business fee is at most R882, while the spread at the quoted board rate mentioned above comes to about R18,600.

Paying and receiving: two different rates

Every bank's forex board shows two quoted rates for each currency: the bank's buying rate (its bid) and its selling rate (its ask). Paying a foreign supplier, you buy dollars from the bank at its ask or selling rate, the higher of the two. With foreign currency being received, you exchange this at the lower one – the bank's buying rate.

The interbank market also has a Bid and Ask rate – the price at which the bank can buy or sell its foreign currency on the open market. If you compare a payment against the interbank ask rate and a receipt against the interbank bid rate, the bank will add a spread on the interbank rate when they sell you foreign currency, or deduct a spread when they are buying foreign currency from you. In other words, you end up paying the spread on money going out and on money coming in.

The figures quoted above used the market rate halfway between the bid and the ask (the mid-market rate), which was R16.5278 at 16:00 on 12 October 2026. If we compare, Standard Bank's board at that time was:

• You pay: R16.7140, which is 18.6 cents (1.13%) above the market.
• You receive: R16.3515, which is 17.6 cents (1.07%) below the market.

Worked Rand examples

To assist, let's do some worked examples:

An importer paying US$1 million a year. Those dollars would cost R16,527,800 at the mid-market rate and R16,714,000 at Standard Bank's board rate, about R186,000 more.

An exporter receiving US$1 million a year. Assuming an exchange at the bank's quoted buying rate, the receipts would be R16,351,500 instead of R16,527,800 – about R176,000 in the spread.

An individual sending US$10,000 abroad, e.g. for school fees or an offshore investment. At the same quoted rate, the spread equates to about R1,860, on top of the bank's fee (and for an individual, the rate charged can sometimes be higher than the quoted board rate).

Standard Bank's board was not the widest. FNB and Absa were close to it on the US dollar, and Nedbank's US dollar board was two to three times as wide. At all four banks, the euro and pound boards were wider than the US dollar board. Obviously, businesses with larger volumes can often negotiate a better rate than the quoted board rate.

To see what the spread and the fees come to on your own payments and receipts, use our free Rand FX costs and savings calculator. For each bank's published fees and board spreads, see bank forex fees in South Africa compared.

How to work out your own spread

First check what kind of deal it was. Your deal confirmation will say.

• A spot deal is changed at the rate on the day, and normally settles two business days later.
• A forward exchange contract (FEC) fixes the rate today for a payment or receipt on a later date, the maturity date. The market forward rate is the spot rate at the time of the deal plus the forward points, which come from the difference between the South African rand and US dollar interest rates over the time to maturity.

So compare a spot deal with the market spot rate, and an FEC with the market forward rate for the same maturity date.

1. Take a recent deal confirmation and note the date and time of the deal, whether it was spot or an FEC (and for an FEC the maturity date), together with the currency, the amount and the rate of the deal.

2. If you have access to this, find the market rate at the same time, spot or forward depending on your deal: the ask for a payment, the bid for a receipt.

3. Subtract the one from the other to get the gap in rand per dollar, euro or pound (or other currency): your rate less the market rate on a payment, or the market rate less your rate on a receipt. On Standard Bank's board above, R16.7140 less R16.5278 is R0.1862, or 18.62 cents.

4. Next, divide the gap by the market rate for the percentage: R0.1862 divided by R16.5278 is 1.13%. Multiply the gap by the dollar amount for the cost in rand: R0.1862 times US$100,000 is R18,620.

5. Then, add the fee from your bank statement. That is what the deal cost you.

The deal time matters a lot, as the market moves through the day. Between 01:00 and 16:02 on 12 October 2026, the rand traded between R16.4705 and R16.5651 to the US dollar, a range of more than 9 cents, so a market rate taken at a different time of day gives you the wrong answer as to your estimated spread.

Our Rand FX costs and savings calculator does this for you, for spot deals as well as FECs. Choose "I have some recent deals" and enter them. For an FEC, choose FEC as the deal type and enter the maturity date, and it estimates the market forward rate from the spot rate at the time of your deal and the two central banks' interest rates on that date. It then works out your bank's margin.

Can I pay less without changing banks?

Yes. Simply open up an international treasury account (Rand and/or CFC) through our preferred FX provider, and you can use this for all (or some) of your forex transactions – through their online platform, and you keep your existing banking relationship as it is. It is an extra option alongside your bank, at no extra cost. The Rand FX savings calculator shows the estimated saving on your own figures.