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It isn't about converting currency as much as a hypothetical arbitrage play in the difference between exchange rates and actual prices. If I took a bunch of dol
by mym1990 5y ago
It isn't about converting currency as much as a hypothetical arbitrage play in the difference between exchange rates and actual prices. If I took a bunch of dollars to Turkey, converted them, bought an obscene amount of Big Macs, brought them back to the US, and resold them, there would be a lot of money to be made due to the value gap. Obviously ignore the fact that Big Macs are perishable goods(arguable?) and that there isn't a decent market for second hand burgers...but this would work for other goods imported into the US.
- moffkalast 5y agoYeah theoretically, except customs tend to nullify that exact arbitrage profit. If anything you'd have a major loss. Could work for inside the EU I guess though, between those that don't use the Euro and those that do.
- gruez 5y agoI'm not sure if you realize this, but your entire comment can essentially be summarized to "offshoring".
- mym1990 5y agoThis isn’t really accurate. Offshoring is the act of moving services or processes to a foreign entity, and while the processes can be the production of goods, my example is simply explaining price arbitrage between goods that are existing. The same thing can be done in forex markets, but the markets are too efficient to actually find those opportunities regularly. And I wouldn’t call forex trading “offshoring”.