Question

Explain how triangular arbitrage works. Why is this important for vehicle currencies in global markets?

Answer 1

Triangular arbitrage is the result of a discrepancies between three foreign currencies that occurs when the currency's exchange rate do not match up. These opportunities are very rare .The traders who take advantage of them have advanced computer or programs to automate the process . Vehicle currency is a form of legal tender used in a cross border import or export Transaction that is not the domestic money of the importer or exporter . The dollar acts as vehicle currency .Vehicle currency is important because the exchange rate the price of currency in terms of another helps to determine nations economic health and wellbeing of all the people residing