Foreign Exchange Market

This indirect cross rate is less than the direct quote so there is an arbitrage opportunity to exploit between the three currencies. In this situation, buying the CAD with MXN by first buying USD with MXN and then buying the CAD with the USD and finally selling that amount of CAD directly for MXN would make a profit because we would be buying the CAD at a low MXN price and selling the CAD at a high MXN price.