Tier-2, Tier-3 cities drive 53% of forex demand

India's forex demand is now increasingly coming from cities beyond the country's major metropolitan areas, according to Thomas Cook India's Forex Report 2026. Tier-2 and Tier-3 cities together make up 53% of overall foreign exchange demand, compared to 47% from Tier-1 cities, which include the metros. The report, based on transaction data from April 2025 to March 2026, shows Tier-2 cities contributed 41% of forex demand, while Tier-3 cities accounted for 12%.

Emerging India is driving the next phase of forex growth, with these cities accounting for over half of the total demand. Leisure travel remains the biggest driver of forex demand, making up 57% of the total, followed by corporate travel at 27% and student travel at 16%. The report highlights a diversification in forex demand, with leisure travel and business travel continuing to be key factors alongside overseas education.

Younger consumers, aged 25-40 years, are the largest segment of the forex market at 37%, followed by those aged 41-60 years at 36%. Senior travellers aged over 60 years account for 21%, while those aged 18-24 make up 6% of forex usage. Millennials and Gen X together make up nearly three-fourths of forex usage. The United States remains the biggest currency market, with the US dollar accounting for 49% of forex demand.

Europe, represented by the euro and British pound, accounts for 23%, while Asian currencies such as the Thai baht, Singapore dollar, Japanese yen, Vietnamese dong, and Indonesian rupiah make up 11%. The Middle East, led by the UAE dirham and Saudi riyal, accounts for 9%, while Australia and New Zealand currencies contribute 5%. Canada accounts for the remaining 3%.

The report also notes a growing trend towards digital adoption in forex purchases, with digital channels accounting for 25% of transactions, up from 75% in branch-assisted purchases.