Question

Assume the following information:

Exchange rate of Singapore dollar in USD = 0.32 USD/SGD
Exchange rate of pound in USD = 1.45 USD/GBP
Exchange rate of pound in Singapore dollars = 4.88 SGD/GBP

If you have 1 million USD to conduct one cycle of triangular arbitrage, what will be your profit?

Answer 1

Step 1
Taking $1000000 and conevrt it to GBP
USD	GBP
1000000	689655.17	[1 gbp = 1.45 usd]
Step 2
689655.17 GBP is converted to SGD Dollar
GBP	SGD
1	4.88
689655.17	3365517.241	[1 gbp = 4.88 sgd]
step 3
Coverting SGD amount back to USD
SGD	USD
1	0.32
3365517.241	10,76,965.52
Now Initially we invested 1,000,000
Now, after 2 conversion, we have USD of 1076965.52
Hence Profit	76965.51724	(in USD)
(1076965.52 - 1000000)