I'm not entirely sure I follow everything that's happening here, but it seems to me that what you're requesting would, if nothing else, allow a currency trader

I'm not entirely sure I follow everything that's happening here, but it seems to me that what you're requesting would, if nothing else, allow a currency trader to use PayPal to conditionally do conversion only if they were making a profit. PayPal is doing the conversion at the time at which it is responsible for the conversion rate, which seems like the "right" thing to do. Admittedly, this results in subpar outcomes for people in India, but I'm not sure they can do anything different.