Tier-2 and Tier-3 Cities Drive India's Foreign Exchange Demand

India's foreign exchange demand is shifting away from major metropolitan centers and towards smaller cities. According to Thomas Cook India's Forex Report 2026, Tier-2 and Tier-3 cities combined account for 53% of overall forex demand, while Tier-1 cities, including metros, make up 47%. The report highlights a trend where emerging India is driving the next phase of forex growth.

The data covers transactions between April 2025 and March 2026 across leisure travel, education, and corporate travel. Leisure travel remains the biggest driver of forex demand, accounting for 57%, followed by corporate travel at 27% and student travel at 16%. Younger consumers are also increasingly contributing to the market, with those aged 25-40 years making up 37% and those between 18 and 24 years accounting for 6%.

The report notes that millennials and Gen X together account for nearly three-fourths of forex usage. The US dollar remains the most widely used currency, accounting for 49% of forex demand, followed by European currencies such as the euro and British pound at 23%. Asian currencies like the Thai baht and Singapore dollar make up 11%, while Middle Eastern currencies like the UAE dirham and Saudi riyal account for 9%.

The report also highlights an increase in digital adoption in forex purchases. While branch-assisted purchases still dominate with a 75% share, digital channels have grown to account for 25%. The report notes that digital forex adoption has increased by 25% year-on-year, while DIY platform usage has grown 50% year-over-year over the last two years.