A survey of arbitrage opportunities in the foreign exchange market: the case of Forex bureaus

Abstract

This central focus of this study was to survey and establish whether there exists arbitrage opportunities in foreign exchange market. In undertaking the study. thirty forex bureaus operating in Nairobi were sampled out of the ninety-four lorex bureaus operating in Kenya. Data collection was done by the use of secondary data that was obtained from the respective forex bureaus. Research findings revealed that indeed there exists arbitrage opportunities. It was established that dealers in various currencies can capitalize on the inefficiencies and gain by buying from one forex bureau and sell in another before the equilibrium is restored. Arising from research, measures aimed at improving the current account position, including policies that affect exports and imports of' goods and services are instrumental in stabilizing the exchange rates. This wil] go along way to ensuring that arbitrage opportunities are minimized.