the ability to trade X for Y at an exchange rate of 0.95Y for 1X, and Y for Z at an exchange rate of 0.95Z for 1Y, and Z for X at an exchange rate of 0.95X for 1Z
The above set of exchange rates is problematic. Thinking of X, Y & Z as currency units, you have Y > X, Z > Y, and X > Z—not possible. You would be unlikely to encounter this set of exchange rates.
Things don’t have to be likely in an ordinary market, it’s just a thought experiment.
But being able to make these trades (one way) is actually realistic, when you consider transaction costs, or fees that someone exchanging currency for tourists would charge.
The above set of exchange rates is problematic. Thinking of X, Y & Z as currency units, you have Y > X, Z > Y, and X > Z—not possible. You would be unlikely to encounter this set of exchange rates.
Things don’t have to be likely in an ordinary market, it’s just a thought experiment.
But being able to make these trades (one way) is actually realistic, when you consider transaction costs, or fees that someone exchanging currency for tourists would charge.