Take the man out the market…

There will be no awards for guessing the subject matter of this, my latest blog post. Having just returned from visiting two continents for the very first time, North and South America, this blog shall contain a tale or two of my travels and an interesting foreign exchange encounter. It’s unknown whether visiting Peru during the potential rainy season and traveling to Miami during hurricane season was an act of bravery, stupidity, or negligence. In truth, it was an unparalleled success, the cause of which lies with those to whom immense thanks are due for their assistance in planning it.

As we have a history in our employee blog posts of not shying away from partisan assessments of our travels, I’ll state this: Peru could just be my favourite country I’ve visited so far. The hospitality of the locals, the splendour of the scenery, and the richness of the culture all earn my full endorsement. One of the areas I visited in southern Peru was the Colca Canyon. Before embarking to try and see the condors, one of the world’s largest flying birds, I decided to explore the canyon on horseback.

Upon mounting said horse, I was careered backwards before being catapulted forwards. As a commensurate professional, I, of course, remained seated throughout the performance. My horse then followed up with a repeat of this whiplash-inducing movement. Sensing my great excitement to be a participant in this equestrian game of buckaroo, Coco then treated me to two 360-degree spins. Once our rodeo had concluded, I nobly unsaddled in favour of a slightly older and more tranquil model.

Lastly, the anecdote you all came here for. Proving that you can never take the market out of the man, here’s the story of an unexpected arbitrage opportunity in the EURPEN market in Lima, Peru. With the USDPEN exchange rate managed around the 3.75 mark, even restaurants have enough confidence to allow a static USDPEN exchange rate to prevail on their menus. It is within other major crosses that Peruvian Sol exchanges are less voluminous and, from my experience, unpredictable.

With a few Euros left over in my wallet from prior travels, while intending to exchange some dollars to soles, I noticed a rather favourable exchange rate penned upon the wall of the bureau de change (or, in this case, the caja de cambio). Having caught up with my team in London that morning, I knew EURUSD was trading around the 1.09 mark. How then could EURPEN be trading at 4.17 with EURUSD comfortably below 1.10? The conclusion: I was a seller of Euros. Unfortunately, liquidity constraints capped my exposure to this presumed arbitrage at the profitability of approximately 5 Sol. I think I’ll stick with my day job.