If the Japanese yen–U.S. dollar exchange rate is ¥104.30/$, and it takes 25.15 Thai bahts to purchase 1 dollar, what is the yen price of the baht?
What will be an ideal response?
To prevent triangular arbitrage, the direct quote of the yen price of the baht (¥/THB) must equal the yen price of the dollar times the dollar price of the baht (which is the reciprocal of the baht price of the dollar):
¥104.30/$ 1/(THB25.15/$) = ¥104.30/$ $0.03976/THB = ¥ 4.1471/THB
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