What keeps foreign exchange quotes in two different countries in line with each other?

Question

Quizplus · Accepted Answer

Arbitrage is the process of taking advantage of price differences between two markets. In the case of foreign exchange, if the exchange rate is higher in one country compared to another, traders will buy the lower currency and sell the higher currency to make a profit. This process helps to keep exchange rates in line with each other between different countries. Cross rates, forward rates, and spot rates are all related to foreign exchange but do not directly impact the relationship between exchange rates in different countries.

What Keeps Foreign Exchange Quotes in Two Different Countries in Line