Currency arbitrage

Currency arbitrage

Taking advantage of divergences in exchange rates in different money markets by buying a currency in one market and selling it in another market.

Currency Arbitrage

An investment strategy in which one buys a currency on one market and instantly sells it on another market. Currency arbitrage takes advantage of temporary discrepancies in price between the two markets. Because currency markets are so liquid, opportunities for currency arbitrage are few and generally last only for a few seconds. Conducting it requires sophisticated computer software.
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Kim also falsely told customers that he would invest their funds in a low-risk virtual currency arbitrage strategy, when, in fact, Kim made high-risk, directional bets on the movement of virtual currencies that resulted in Kim losing all $545,000 of his customers funds.
Currency arbitrage takes advantage of these exchange rate divergences by buying a given currency on one market and instantaneously selling it on another.
Paradoxically, however, investors may well identify opportunities in this market over the short-term, particularly international buyers that can benefit from the currency arbitrage that has opened up by a weaker Sterling.
A foreign currency arbitrage trading strategy may employ several major currencies, including currencies of the industrialized nations for which there are regulated futures contracts, as well as the currencies of smaller nations.
The idea behind currency arbitrage is to take advantage of the price differential between spot or cash trades versus the pricing of future or forward value of the same currency.
CEFC seems to be shifting to that role from an earlier image as a commodity trade financing player," said a senior Beijing trader, referring to CEFC's practice of using mixed aromatics to raise bank loans to profit from the currency arbitrage. Besides hiring trading executives from state oil companies, CEFC is due to start up an 18-million-barrel tank farm on Hainan island this year, its first such asset in China to store mostly crude oil.
Its strategy is long term, fundamental seeking alpha opportunities in most market conditions by benefiting from currency arbitrage and exchange rate differentials.
Operating primarily on a currency arbitrage basis, the moneychangers would buy incoming foreign moneys from the pilgrims and sell them to the bankers in Makkah, with the peak of money changing beginning six months before the onset of pilgrimage.
"There would be a natural currency arbitrage between dollar and sterling but we are not concerned.
"Some small bookstores in Bolivia actually buy their stock from Southoftheborder.com, capturing that currency arbitrage, and then resell the inventory to their customers at a 50 percent markup.
parent; (6) to finance a subsidiary located in a country with adverse economic conditions where local debt is impossible to secure at economical interest rates; (7) to engage in sophisticated interest rate or currency arbitrage; and, (8) to engage in a form of tax rate differential arbitrage approved in the Conference Report to the Tax Reform Act of 1986 -- i.e., to lend to subsidiaries in jurisdictions with higher effective rates than the U.S.