GENERAL KNOWLEDGE

Detailed explanation-1: -A fixed or pegged rate is determined by the government through its central bank. The rate is set against another major world currency (such as the U.S. dollar, euro, or yen). To maintain its exchange rate, the government will buy and sell its own currency against the currency to which it is pegged.

Detailed explanation-2: -Locational arbitrage can be defined as the act where an investor tries to exploit the minor exchange rate differences for a given currency pair between multiple banks for generating a profit. These differences between exchange rates are usually very thin and are generally valid only for a brief period of time.