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Homework answers / question archive / You have the following quotations on the Chinese yuan (CNY) against the Australian dollar (A$) at the HSBC Bank in China and National Australia Bank in Australia
You have the following quotations on the Chinese yuan (CNY) against the Australian dollar (A$) at the HSBC Bank in China and National Australia Bank in Australia. Can you make a locational arbitrage profit? If yes, calculate the arbitrage profit in percentage. (enter two decimal number without sign or symbol) Currency HSBC in China National Australia Bank in Australia Bid Ask Bid Ask Chinese yuan A$0.3043 A$0.3291 A$0.3474 A$0.3613
Yes arbitrage is possible here.
We will buy CNY at HSBC in China @ A$0.3291
and sell CNY at National Australian Bank in Australia @ A$0.3474
Therefore net gain will be 0.3474 - 0.3291 = A$0.0183
In percentage = 0.0186/0.3291 * 100 = 5.56%
