Arbitrage is the simultaneous purchase and sale of an asset in different markets to exploit tiny differences in their prices. In the foreign exchange market, this involves buying a currency in one market where it is priced lower and selling it simultaneously in another market where it is priced higher, making a profit from the price difference.
When currency is bought at a lower price at one place in the foreign exchange market and at the same time sold at a higher price at another place, this process is called
Asked in APPSC Group II Mains paper 2 2025 · Topic: Foreign Exchange Market and Exchange Rate Determination (Hedging and Arbitrage in Foreign Exchange Markets)
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Answer: A. Arbitrage
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