The interbank rate
The interbank rate is the price at which commercial banks trade dollars with each other for settlement. It is the benchmark quoted in financial reporting and the basis for import payments, letters of credit and most electronic remittances.
It is the rate published across this site, because it is the cleanest single reference and it is the number your bank starts from before applying its own margin.
The open market rate
The open market rate is what licensed exchange companies charge for physical cash. Travellers, students paying fees abroad and anyone carrying notes deal at this rate.
It usually sits above the interbank rate because cash has handling costs and because demand for notes spikes around Hajj, Umrah, the academic intake season and periods of currency uncertainty.
Reading the spread
A narrow gap between the two rates suggests a calm market with enough dollar liquidity. A widening gap has historically been an early signal of pressure on the rupee, and it is worth watching if you have a large payment coming up.
When you compare providers, compare the all-in rate after every fee. A headline rate with a fixed charge attached can beat or lose to a slightly worse rate with no charge, depending on the amount you are sending.
Which rate applies to you
Receiving a remittance into a Pakistani account: close to interbank, minus your bank's margin. Buying cash before travel: open market. Paying an overseas university directly from a bank: interbank plus the bank's telegraphic transfer spread and charges.
For amounts that matter, ask for the exact rupee amount that will be debited or credited rather than the rate. It removes every ambiguity in one question.