India's foreign exchange demand is increasingly shifting beyond metropolitan centres, with Tier 2 and Tier 3 cities together accounting for 53 per cent of the market, according to Thomas Cook India's Forex Report 2026.
The report, based on transaction data between April 2025 and March 2026, points to a widening geographic base for foreign exchange demand as outbound leisure travel, overseas education and international mobility increase across smaller Indian cities.
Tier 1 cities, including metros, now contribute 47 per cent of forex demand. Tier 2 cities alone account for 41 per cent, while Tier 3 locations contribute another 12 per cent.
Leisure travel remains the biggest contributor to India's forex requirements, accounting for 57 per cent of demand. Corporate travel contributes 27 per cent, while overseas education accounts for the remaining 16 per cent.
The report also shows that consumers aged between 25 and 40 account for 37 per cent of forex usage, while those in the 41-60 age bracket contribute another 36 per cent. Together, the two groups represent nearly three-fourths of the market.
Younger travellers, however, are leading the shift towards digital forex purchases. Those aged 18-24 account for only 6 per cent of overall usage but are emerging as the fastest adopters of digital-first channels.
Around 25 per cent of customers now transact through digital channels such as websites, mobile apps, WhatsApp and quick-commerce platforms, while branch-assisted transactions continue to account for 75 per cent.
Usage of do-it-yourself digital platforms has grown by 50 per cent year-on-year over the past two years, according to the report. The average value of a digital forex transaction stands at around Rs 76,000.
Another significant change is the shortening of the forex purchase cycle. Travellers are now buying foreign currency around four to seven days before departure, compared with 10 to 14 days earlier.
The choice of currencies is also becoming more diverse as Indians increasingly travel to short-haul destinations in Asia and West Asia.
The US dollar remains the largest currency by demand but now accounts for 49 per cent of forex requirements. Europe-linked currencies contribute 23 per cent, followed by Asian currencies at 11 per cent and Middle Eastern currencies at 9 per cent.
Currencies such as the Thai Baht, UAE Dirham, Singapore Dollar, Malaysian Ringgit and Vietnamese Dong are seeing growing demand, reflecting changing international travel patterns.
Payment preferences also differ depending on the purpose of travel. Cash remains popular among holiday travellers, while forex cards have a particularly strong presence among corporate customers. Cards account for 84 per cent of forex usage among corporate travellers, with multi-currency cards forming a substantial share of this segment.
The findings indicate that India's forex market is becoming less dependent on its biggest metropolitan centres, with rising incomes, international travel aspirations and overseas education increasingly driving demand from Tier 2 and Tier 3 cities.