Hi everyone,

I'm new here but I decided to join the fray because I got some very useful information here that saved me money and a ton of embarrassment. Ok, to my 4-12% story. So, I'm always looking for ways to beat/play the system because that's the only way to make money.

I've done a bit of forex trading online and was wondering if you can get straight rates/conversions? That is, say, buy GBP, then buy JPY with those GBP's then buy back USD with those JPY's.

I ask this because I was playing around with a theory and came up with this. PS: I have verified the numbers but await your input before implementation. The currency trio I am looking at working with is KES, UGX and USD. This is how it would work.

Open KES and USD accounts in Kenya and a UGX account in Uganda. First, negotiate a rate here to buy USD with KES and deposit that in your USD account. Then call your bank in Uganda and negotiate for a straight conversion from USD to UGX and deposit that in your UGX account.

Then call your bank here and tell them you wish to transfer UGX to your KES account and negotiate a rate. The numbers tell me you can make 4-12% per "round trade" regardless of prevailing currency rates, and this due to the fact that the relationship the USD has with KES is different from that which it has with UGX. Kindly do the numbers and confirm to me whether this is indeed so. Thanks.

@Hi-Lo; well, that's the benefit of using the local currency loophole; UGX will be the local currency in your UGX account and KES will be the local currency for your KES account. Tradition states that when money is repatriated it is automatically converted to the local currency unless requested otherwise. In addition, doing this in one country would not work as the currency economics would all be tied in and the net difference after a round trade would be close to zero. PS: this theory exploits the macro-economic elements of each country relative to each other, something that simple indicative exchange rates given by international sources do not reflect.

@guru267; Well, when I use the average exchange rates, I get a net zero difference. I went out and tested this currency trio trade locally and made 2% in one round trade. The idea being, when you exchange one currency for a stronger currency, then buy a currency weaker than the first with that, then buy back the first currency, you have actually exploited the divisive aspect of currency trade, and the multiplicative aspect of the same, all at once. Somehow, I was incredulous when it worked on paper, and can't seem to totally explain how exactly it works but when I had the money in hand..well, let's just say, the numbers don't lie...

Trx costs irrelevant/negligible?

Somebody once claimed that he can count to one billion. I told him now way. he insisted he can. So I told him to start counting and call me when he finishes!

Same argument here: put your money where your mouth is. If you think you can make a profit, go right ahead and do it. Give us an update of your transactions in December.

End of discussion!

The transaction costs in the local setting are negligible but I'm yet to try the two country scenario.

Dear @Extrapreneur

Much as we agree with your assertion some of the feedback in response to your thread was counter productive, we've restored posts as users had taken time to read, analyse, and respond.

Kindly allow us to welcome you to Wazua, as we urge you not to be disheartened by 1 or 2 mindless responses. Judging by your initial posts, our community will benefit from your presence.

Thank you for joining the community.

@ Extra ignore the negative posts. Enlighten the rest of us. I tend to think that the bank charges for the transfers wud erode any gains made in the conversions. Don't the banks charge?

Does this mean that one cud get better rates from independent bureax, then deposit the money in an appropriate bank account and effect the necessary transfers?

@extrapreneur - I am skeptical this would work on a long-term basis... This might have been a one-off due to various movements in currency.

1) The spreads that every bank makes on $-KES ; UGX-KES ; $-UGX [Vary but can be 1%-10%]
2) Transaction costs [450/- is very good. Which bank? I paid KES 2,500 to wire funds to Uganda]

The banks with branches in Uganda might be the best to use DTBK, UBA, Equity, KCB... I am not sure about the rest...