USD/INR arbitrage

Discussion in 'Trading' started by viv_zoom, Feb 6, 2008.

  1. viv_zoom


    For someone who can borrow USD overseas and invest in India:

    USD o/n rates traded at a high of 56% today!!!

    This is due to USD shortage in the domestic market here.
  2. man


    don't you think "arbitrage" isn't a real, real stretch ...?
  3. viv_zoom


    arbitrage isnt a new thing here... there are regular arbitrage trades between onshore markets and offshore ndfs...

    all depends on limits
  4. make it triangular, then we'll talk ;)
  5. viv_zoom


    thnx for the doc.

    i haven't traded in ndfs as such... am into the domestic market only. but there are players which have presence in both and lock arbitrage.

    normally these are 10/20 paise arbitrage only (max 0.5%)...

    but when there is serious liquidity problems in the system (usd shortage or overall liquidity problems) the rates can go to 50% and higher. but this situation normally lasts for 3-4 days only in an year. monday was such a day when dollar shortage in the system caused the c/t market to go into discount.... normally its in premium as inr interest rates are more than usd.

    last year march end the liquidity problems (its a financial year close for india) caused the inr o/n rates to go as high as 100%!!!

    for guys who have some exposure to india these can be opportunities to lock in good money.