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.
The risk implicit in foreign currency arbitrage
remains an issue and something that U.S.
"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.