Is transferring money to take advantage of the exchange rate illegal?
I
was thinking about a money making scheme but im not sure if its
illegal.
This is it- (I live in Australia)
I make a foreign currency (USD) bank account and transfer a sum of money
over to it.
I gain (currently) 5c per dollar (AUSD).
After the exchange (AUSD to USD) goes back down (if it does), I transfer
the money to my AUSD bank account gaining on the exchange again.
Is this illegal?
Economics - 3 Answers
Random Answers, Critics, Comments, Opinions :
1 :
That
is known as arbitrage...very legal and very risky...most of the wall
streeters who are great at it have phd's in mathematics...
2 :
no.
that's called currency trading. and its an important feature to make
currency markets function with liquidity. though its generally extremely
difficult to forecast currency rates with any kind of precision
so....good luck.
3 :
It is not only legal but there is a
market to do it with a lower transaction cost than what you want to do,
but is very risky . Unlike stocks where everyone can win because
companies make profits, the foreign exchange market is a zero sum game
so for every winner there is a loser. Most of the people in the market
are planing some future investment in a foreign currency and want to
guaranty the the cost will not change because of exchange rates but
some people use it to gamble.
