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I was looking at Singapore dollar exchange rates provided by a bank:

POSB Singapore dollar exchange rates

Source: Foreign Currencies - Foreign Exchange | POSB

What is the difference between TT and OD?
The webpage itself says:

  • Telegraphic Transfer ("TT") rates and On Demand ("OD") are rates available involving foreign exchange.

  • The TT rate is applicable to funds that has already been cleared with the Bank while the OD rate is applied otherwise.

  • The buying rate is used when foreign currency is sold to the Bank and the selling rate is used when foreign currency is bought from the Bank.

I don't understand the "explanation" above. I also tried to read other websites, but all of them go on and on about remittances, demand drafts, foreign checks, invoices, bills of exchange, letters of credit, … which are documents and instruments that I don't really understand.

  • What is TT and what is OD?
  • Suppose I have Euros, and walked into the bank to buy Singapore dollars, which rate will I get? $1.5809 per Euro or $1.5731 per Euro?
  • Notice how the TT rates are generally better than the OD rates. Why is this so? And why is the US dollar alone in having a TT rate that is worse than the OD rate?
  • Since TT rates are usually better, how do I get TT rates?
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  1. As shown in the screenshot above, TT is telegraphic transfer (wire transfer in another sense). You can best think of it as your PayNow across banks/accounts but because in this case there's FX currencies involved, it usually takes time (1-3 days process time across different banks) and an additional fee/charge for the transfer. OD stands for on-demand, you can best think of it as walking to the bank counter and exchanging money at that instance.

  2. You will get SGD $1.5731 per Euro, as explained above, as walking into the bank subjects you to the OD rate.

  3. TT rates are usually better than OD rates because banks usually charge a nominal fee for the transfer, e.g. SGD $20-25 from the bank where you took your screenshot from.

    For the second part of your question, it's linked to the bid-ask spread of FX and the liquidity of USD, which is a separate question.

  4. You get TT rates by doing a telegraphic transfer to another account. But please be mindful of the charges that you might incur (see above).

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